The package includes doubling of the oil financing facility, additional money either through deposits or Sukuks and rolling over of the existing $4.2 billion facilities.
"However, technical details are being worked out and will take a couple of weeks to get all documents ready and signed. Prime Minister Shehbaz Sharif and his official entourage have left Saudi Arabia but Minister for Finance Miftah Ismail is still staying there to finalise the modalities of the increased financial package.
Sharing the salient features of the financial package, the official said that Pakistan had proposed doubling of the oil facility from $1.2 billion to $2.4 billion and Kingdom of Saudi Arabia agreed to it. It was also agreed that the existing deposits of $3 billion would be rolled over for an extended period up to June 2023.
"Pakistan and KSA discussed an additional package of over $2 billion either through deposits or Sukuk and it is likely that even more money will be provided to Islamabad," said official sources, adding that the size of the total package would be determined when additional money was finalised.
Saudi Arabia had provided $3 billion deposits to the State Bank of Pakistan in December 2021 while the Saudi oil facility was operationalised from March 2022 whereby Pakistan was provided $100 million to procure oil. Saudi Arabia had provided a $7.5 billion package during the last tenure of the PMLN government (2013-18). Under the PTI-led regime, Saudi Arabia had provided a package of $4.2 billion, including $3 billion deposits and $1.2 billion oil facility for one year and linked it with the IMF programme.
Now Saudi Arabia has provided an enhanced financial package to Pakistan when its economy is in dire straits and the country is facing a balance of payment crisis. The country’s foreign exchange reserves held by the State Bank of Pakistan depleted by $6 billion in the last six to seven weeks and nosedived to $10.5 billion at the moment. With the rising current account deficit at $13.2 billion in the first nine months and pressing external loan repayment requirements, Pakistan requires financial injections of $9 to $12 billion till June 2022 to avert further depletion of foreign currency reserves. Pakistan will have to repay external debt servicing of $3 billion in the last quarter (April-June) of the current fiscal year.
The revival of the IMF programme is considered as imperative because the gross external financing requirement is estimated to the tune of $35 billion during the next fiscal year 2022-23 and without the backing of the programme, the huge financing gap cannot be bridged. However, independent economists, like Dr Ashfaque Hasan Khan, suggest a ban on the import of luxury cars and other unessential items for saving dollars.
Later in a tweet, Miftah Ismail said, "Just said goodbye to Prime Minister Shehbaz Sharif and other colleagues at Jeddah Airport, who are on their way to Islamabad after a brief stopover in Abu Dhabi to meet Crown Prince Muhammad Bin Zayed. I remain in SA to meet Saudi officials and start technical-level talks."
