As the nation’s eighth assessment of a $7 billion IMF bailout hit roadblocks, Pakistan is likely to obtain a multibillion-dollar financial rescue package from long-time ally Saudi Arabia this month, according to two sources.
According to the two representatives of the finance ministry, the Saudi package would include oil on deferred payments and deposits to increase the nation’s foreign reserves.
Ishaq Dar, the finance minister, expressed prior optimism for swiftly approaching discussions with Saudi Arabia. “We are expecting that we will, God willing, get financial support from Saudi Arabia, most likely this month,” one of the senior officials told?Reuters, adding it would be around a $4 billion package.
“Some of that package will go to our reserves and the rest is oil and some other commodities on deferred payments,” he said.
“Pakistan has brotherly relations with Saudi Arabia. Both countries have helped each other in times of need,” a finance ministry media official told Reuters, without elaborating or giving any further details.
The balance of payments issue is affecting Pakistan’s economy. Just $6.7 billion in reserves remain at the central bank, hardly enough to cover imports for a month.
In contrast to the 0.7% of GDP agreed upon by the IMF, the fiscal deficit reached 1% of GDP in the first quarter of the current fiscal year.
Pakistan has been urgently trying to find funding to satisfy its foreign payment commitments for the current financial year because the IMF’s ninth review has been on hold since September. Before the review, Pakistan tried to contact friends to request financial assistance, and Dar had stated that he would anticipate receiving $3 billion from a friendly nation.
Dar stated on Monday that the IMF had requested further material to complete the ninth review, calling the situation “strange” given that Islamabad had previously satisfied all the conditions.
The terrible flood that hit Pakistan this summer was believed to have caused over $30 billion in losses. The IMF demanded an explanation from Pakistan about how it would pay for repair and rehabilitation costs.