Pakistan approaches Saudi Arabia with requests for long-term economic support

Islamabad, Mar 9 (PTI) Pakistan has approached Saudi Arabia with a slew of requests for long-term economic support, including conversion of short-term existing deposits of USD 5 billion into a long-term facility of 10 years, according to a media report on Monday.

Pakistan also requested to enhance the oil facility on deferred payment from USD 1.2 billion to USD 5 billion with increased tenure, securitisation of Pakistani diaspora's remittances of USD 10 billion and others.

The News reported, quoting top official sources, that Pakistan's economic woes were multiplying in the aftermath of ongoing geopolitical tension amid the ongoing US-Israel-led war against Iran.

On the other hand, Pakistan is negotiating with the IMF for completion of the third review under the USD 7 billion Extended Fund Facility (EFF).

Pakistan and Saudi Arabia were already negotiating a comprehensive economic cooperation package, and the recent escalation has given impetus to the ongoing parleys, whereby at the highest level, Pakistan asked for the required support to tackle the arising challenges.

Pakistan has requested the conversion of existing Saudi deposits of USD 5 billion, lying with the State Bank of Pakistan (SBP), into a long-term facility. This request has been made to convert a short-term deposit of USD 5 billion into a long-term facility of 10 years with favourable pricing.

The second request is to jack up the oil facility on deferred payment under which the Kingdom is being asked to enhance the facility of USD 1.2 billion to USD 5 billion. The tenor period for repayment may also be increased from one year to three years, whereby repayment of every tranche is made after three years.

The third request has been made for the securitisation of diaspora remittances. This kind of securitisation can boost forex reserves and reduce costly foreign borrowing.

For the fourth request, Saudi Arabia may consider providing a guarantee for Pakistan’s new endeavours for international Sukuk issuance in order to allow the country to raise international capital at lower rates.

Pakistan made the fifth request for a concessional credit line to the EXIM Bank of Pakistan. The Government of Pakistan has established a new EXIM Bank in order to achieve export-led growth under the IMF programme.

Islamabad has also made another request to the Kingdom for the consideration of waiving off bank guarantee requirements for import-related transactions with Pakistan.

The Kingdom has also been asked to consider investment, especially in the Public Investment Fund (PIF), in order to explore investment opportunities in the country.

The Government of Pakistan also requested help in adjustments in primary surplus targets in line with the IMF programme to accommodate the proposed tax rationalisation. The expenditures remain highly rigid, curtailing further cuts, so the fiscal deficit may rise further, but the long-term impact will be positive.

The Saudi response could not be ascertained immediately to these eight requests from Pakistan, The News reported.

The paper said that it sent questions to the Ministry of Finance and the SBP but got no replies. PTI SH ZH ZH