Pakistan is in need of money to receive $8 billion in financial aid from Saudi Arabia – Times of India

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Saudi Crown Prince Mohammed bin Salman meets Pakistani Prime Minister Shehbaz Sharif as he arrives in Saudi Arabia’s Jeddah (Reuters)

ISLAMABAD: Saudi Arabia has agreed to provide Pakistan with a “significant package” of about $8 billion to help the poor country bolster dwindling forex reserves and revive its ailing economy, a media report said on Sunday.
Pakistan faces growing economic challenges, with high inflation, sliding forex reserves, a widening current account deficit and a depreciating currency.
Pakistan secured the deal during Prime Minister Shehbaz Sharif’s visit to Saudi Arabia. The financial package includes doubling the oil financing facility, additional money through deposits or Sukuks and rolling over the existing $4.2 billion facilities, The News reported.
“However, technical details are being worked out and it will take a few weeks for all documents to be ready,” the report said, citing key official sources familiar with the development.
Prime Minister Sharif and his official entourage have left Saudi Arabia, but Finance Minister Miftah Ismail is still in the Gulf country finalizing the modalities of the financial package.
“Just said goodbye to Prime Minister Shehbaz Sharif and other colleagues at Jeddah Airport, who are on their way to Islamabad after a short stopover in Abu Dhabi to meet Crown Prince Mohammed Bin Zayed. I remain in SA to meet Saudi officials and technical-level talks” , Ismail said in a tweet.
Pakistan had proposed doubling the oil facility from $1.2 billion to $2.4 billion and Saudi Arabia agreed. It was also agreed that the existing $3 billion in deposits would be rolled over for an extended period until June 2023, an official said.
“Pakistan and Saudi Arabia discussed an additional package of more than $2 billion, either through deposits or Sukuk and it is likely that more money will be provided to Islamabad,” the report said, adding that the size of the overall package will be determined when the extra money is around.
Saudi Arabia provided $3 billion in deposits to the State Bank of Pakistan in December 2021, while the Saudi oil facility was operational as of March 2022, giving Pakistan $100 million to buy oil.
The oil-rich Gulf state had provided Pakistan with a $7.5 billion package during the last term of the PML-N government (2013-18). Under the PTI-led regime led by ex-Prime Minister Imran Khan, Saudi Arabia has provided a $4.2 billion package, including $3 billion in deposits and a $1.2 billion oil facility for a year and pegged to the IMF programme.
Saudi Arabia has offered Pakistan an improved financial package as the economy struggles and the country faces a balance-of-payments crisis. The country’s foreign exchange reserves have been depleted by $6 billion in the past six to seven weeks, falling to $10.5 billion.
With the rising current account deficit of $13.2 billion in the first nine months and urgent repayment requirements for external loans, Pakistan needs financial support of $9-12 billion until June 2022 to avoid further depletion of its foreign exchange reserves.

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