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The Saudi government has reintroduced $3 billion in aid to Pakistan

ISLAMABAD: Saudi Arabia has agreed to reintroduce financial aid to Pakistan, including around $3 billion in safe deposits and $1.2 billion to $1.5 billion in oil deliveries on a delayed payment basis.

A deal to this effect was made during Prime Minister Imran Khan’s visit to the kingdom this week, according to a senior government official. Shaukat Tarin, the PM’s adviser on finance and taxation, and Hammad Azhar, the Energy Minister, will make a formal announcement at a press conference on Wednesday.

Information Minister Fawad Chaudhry later verified the news in a late-night tweet. “Saudi Arabia announced help for Pakistan with 3 billion dollars in the Pakistan central bank and 1.2 billion dollars in refined petroleum product finance over the year,” he said.

Also read: Saudi Arabia will offer a delayed oil facility worth $3.6 billion: Tarin

The Saudi government would immediately deposit $3bn in Pakistan’s account for a year and keep it rolling at least until the completion of the IMF programme in October 2023, the official earlier said.

The facility is expected to help Pakistan convince the IMF about its financing plan. In addition, the Saudi government would provide crude oil to Islamabad on deferred payments worth up to $1.5bn per annum.

Saudi Arabia had also provided $3bn in cash deposits and promised a $3bn oil facility to Pakistan to help the latter shore up its foreign exchange reserves in 2018. However, as the bilateral relations deteriorated later Islamabad had to return $2bn of the $3bn deposits.

In June this year, a news conference was informed that Saudi Arabia had announced the availability of $1.5bn oil facility per annum. Three months later then finance minister Tarin had claimed that an agreement for another Saudi oil facility on deferred payments had been reached and would be formally announced within two to three days. The announcement got delayed as Islamabad engaged with the US authorities and the IMF.

“They [Saudi Arabia] are not only considering another oil facility on deferred payments but an agreement has almost been reached that would hopefully be made public in two or three days,” Mr Tarin stated on September 30 on the floor of the National Assembly in response to a question.

Also read: Total foreign loans hit $3.2 billion in July-Sept

Officials said the IMF had asked Islamabad to ensure financial flows that it had promised at the time of finalising the 39-month Extended Fund Facility. Support from the kingdom and China was a key pillar of the three-year financing plan.

Mr Tarin had confirmed to the National Assembly that with the premier’s approval, during the financial year 2013-14, an amount of $1.5bn, equivalent to Rs157.19bn, was received as grant from Saudi Arabian Monetary Agency and transferred to Pakistan Development Fund Ltd account in the State Bank of Pakistan.

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