Saudi Arabia will provide Pakistan $3 billion dollars for a year to help the key South Asian country meet its immediate balance-of-payments requirements as Prime Minister Imran Khan met with King Salman bin Abdul Aziz.
In addition, Riyadh will also supply oil to Pakistan under a one-year deferred payment facility amounting to another $3 billion.
The two $6 billion arrangements will provide a much-needed relief to Islamabad as the new Imran Khan government looks to fix economic downturn, caused by a spate of factors including the last two government’s inability to take bold reform measures and instead rely on a heavy dose of costly loans.
The Saudi support will help Pakistan deal with financial meltdown marked by inflation, and a stalemate in the level of exports. Despite Chinese investment in a massive energy and infrastructure corridor, Pakistan is lagging behind its development targets. Khan has also introduced steps to facilitate foreign remittances into the country.
Pakistan has sought an IMF bailout package to shore up its economic outlook and address the dwindling foreign exchange reserves. The IMF will hold negotiations with Pakistan in November.
Imran Khan is in Saudi Arabia for the Future Investment Initiative conference at the invitation of King Salman, whose kingdom is facing a huge international backlash over killing of Saudi journalist Jamal Khashoggi in Saudi consulate in Istanbul.
The Pakistani government revealed a series of decisions made during the meetings.
- It was agreed that Saudi Arabia will place a deposit of US $3 billion for a period of one year as balance-of-payment support. A memorandum of understanding (MoU) was signed in this regard between Finance Minister Asad Umar and his Saudi counterpart Muhammad Abdullah Al-Jadaan.
- It was also agreed that a one-year deferred payment facility for import of oil, up to $3 billion, will be provided by Riyadh. This arrangement will be in place for three years, after which it will be reviewed.
- Saudi Arabia also “confirmed its interest” in investing in a petroleum refinery in Pakistan. An MoU for this project will be signed after obtaining the cabinet’s approval.
- The Kingdom also expressed interest in the development of mineral resources in Pakistan. In this regard, the federal government will hold consultations with the Balochistan government, following which a Saudi delegation will be invited to Pakistan to finalise matters.
Prime Minister Khan, who has risen to power following his party PTI’s victory in July 25 election also discussed ties with Crown Prince Mohammed bin Salman.
