Following a crucial low point in its foreign exchange reserves, Pakistan urged Saudi Arabia on Wednesday for an immediate $3 billion financial infusion. The country’s new army leader was also anticipated to play a key role in securing the bailout during his planned first visit to the Kingdom, as per tribune.
According to representatives from his ministry, the request was made by Finance Minister Ishaq Dar during a meeting with the Saudi envoy, Nawaf bin Said Al-Malki.
The finance minister met with foreign diplomats for the second day in a row in an attempt to secure their financial assistance and persuade the International Monetary Fund (IMF) to relax its restrictions on delivering the country’s $1.2 billion tranche.
Dar requested a $3 billion cash rescue in addition to rolling over the prior debt by the same amount.
Nevertheless, there is a pressing need for action because the nation’s foreign exchange reserves have dropped below $7 billion for the first time since January 2019.
Approximately $6.7 billion in reserves are available at the moment, which is nearly the same amount as on January 18, 2019.
According to the sources, the $6.7 billion reserves are insufficient to cover the $8.8 billion in principal and interest payments due between January and March of the current fiscal year.
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According to a press statement from the finance ministry, Dar praised the ambassador for extending the duration of a $3 billion deposit by the Saudi Fund for Development (SFD) in the State Bank of Pakistan (SBP).
$13 Billion Financial Package
According to the finance minister, Pakistan obtained “assurances of a $13 billion financial package from China and Saudi Arabia, including $5.7 billion in new loans,” in the first week of November.
Saudi Arabia contributed $4.2 billion of them, and China contributed $8.8 billion.
However, over the previous month, no progress could be accomplished; instead, the nation paid back two Chinese commercial loans totaling $1.2 billion.
The $13 billion package covers 38% of the nation’s projected gross external finance needs for the fiscal year 2022–2023.
Despite setting multiple stringent conditions, the IMF has not produced a significant financial package, so its realization can reduce the risk of default.
According to the sources, it was also discussed at the meeting that General Syed Asim Munir, the next Chief of Army Staff (COAS), will shortly travel to the Kingdom.
After the meeting, it was revealed that the military leadership would also discuss the financial injection issue.
The news release highlighted the fact that the Saudi Arabian ambassador was informed of the continuing post-flood restoration and rehabilitation program by the finance minister.
Both parties discussed the prospect of expanding the present $1.2 billion Saudi oil facility with deferred payments throughout the discussion.
More Saudi’s Investment
According to the officials, there were also conversations over the Saudi investment of $1 billion in Pakistan.
Pakistan is once more turning to its friendly neighbors for assistance after failing to resurrect the $6.5 billion IMF rescue package, which has already been halted four times in the past three years.
The IMF has not yet decided on the dates for the staff-level negotiations, which are important to obtaining the $1.2 billion next loan tranche.
On Wednesday, Pakistan and the IMF teams discussed the viability of the stated projections of $32 billion in foreign inflows over the current fiscal year.
According to the sources, the discussions mostly centered on the finance ministry’s predictions of $26 billion in inflows.
According to official sources, the forecasts included budgetary loans totaling $23 billion and grants totaling $1.5 billion.
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The amount of foreign commercial loans Pakistan anticipates receiving has been revised downward from the earlier forecast of $7.5 billion to $6.2 billion.
The first quarter did not see the arrival of this money.
$3.5 billion of the expected $6.2 billion in foreign commercial loans will come from China.
The foreign commercial banks with shorter maturity from non-Chinese foreign commercial banks will contribute the remaining $2.7 billion.
