Saudis offer Pakistan $6bn rescue package to ease economic crisis

Fredrick Soto
October 24, 2018

On Tuesday, the kingdom had agreed to give Pakistan $3 billion in foreign currency support for a year and a further loan worth up to $3 billion in deferred payments for oil imports to help stave off a current account crisis.

The Saudi agreement came as new Pakistani Prime Minister Imran Khan attended a Saudi investment conference that has been boycotted by several other leaders over the death of a dissident Saudi writer at the country's consulate in Istanbul.

"This arrangement will be in place for three years, which will be reviewed thereafter", Pakistan's Finance Ministry said in a statement.

Sources in the finance ministry told PTI that Pakistan needed about United States dollars 10 billion in the current fiscal year to support its imports and paying foreign debts.

The situation could further improve if China also makes some commitments to rescue its "all-weather friend", it said, noting that Khan is scheduled to travel to China on November 3 for his first visit.

Khan started his address saying that the country has received an "excellent" bailout package from Saudi Arabia.

Saudi Arabia also "confirmed its interest" in investing in a petroleum refinery in Pakistan.

Later, the Prime Minister along with his team will leave for Shanghai where Pakistan will attend the CIIE and would try to woo the worldwide investors to take advantage of the economic incentives Government of Pakistan is offering to both local and foreign investors.

Khan replied to the news of the cancellation during his visit to the eastern Pakistani city of Lahore at the end of last month, saying: "I hope the Indian leadership will shun arrogance and hold (peace) talks with Pakistan".

The deal was signed Tuesday by Pakistan's Finance Minister Asad Umar and his Saudi counterpart, Muhammad Abdullah Al-Jadaan, on the sidelines of an global investment forum underway in Riyadh. Days before Khan's visit to Riyadh, Pakistan's' State Bank announced that inflation in the coming year would double, reaching 7.5 percent, while the country is likely to miss its expected growth target of 6.2 percent.

"We're desperate for possible Saudi loans to shore up Pakistan's economy", he said before starting his trip to Riyadh.

"Unless we get loans from friendly countries or the IMF (International Monetary Fund), we actually won't have in another two or three months enough foreign exchange to service our debts or to pay for our imports". Saudi Arabia has been widely blamed for the journalist's disappearance.

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