KSA’s financial assistance

AT a time when Pakistani economy is in dire straits and needs financial assistance to meet its immediate and medium term requirements, Saudi Arabia has agreed to provide a $6 billion package to Islamabad, which will go a long way in addressing balance of payment crisis. The agreement came during second visit of Prime Minister Imran Khan to the Kingdom within a month during which he held extensive discussions with Saudi leadership on bilateral relations, Pakistan’s prevailing economic and financial difficulties. The PM also addressed the investment moot convened by Riyadh.
According to the MoU signed by the two countries, Saudi Arabia would immediately deposit $3 billion in State Bank of Pakistan to help shore up dwindling foreign exchange reserves and also provide oil worth $3 billion on deferred payment for next three years. This would, as explained by Finance Minister Asad Umar, mean a total of $12 billion package from KSA spread over three years, which is a substantial relief and assistance for Pakistan. Analysts say after Saudi Arabian $3billion cash assistance, the SBP’s reserves will increase to $11billion. The $3billion oil on deferred payment will lower the overall financing needs by the same amount, which had been earlier estimated at $31 billion. The cash assistance will lower requirements to devalue the rupee, as the one-off assistance will — for the time being — improve the macroeconomic projections. By agreeing to the request of Prime Minister Imran Khan to provide financial help to Pakistan, Saudi Arabia has once again demonstrated its commitment to welfare of people, progress and development of Pakistan. It provided similar assistance in the past whenever Pakistan was pushed to brink of bankruptcy.
The most striking feature of the Saudi assistance is that it is without conditions and instead it would help Pakistan secure loans from the International Monetary Fund (IMF) on somewhat acceptable terms. Pakistan’s bargaining position with IMF would improve further if reports about agreement of China and the United Arab Emirates (UAE) to provide about three billion dollars came true. KSA and King Salman bin Abdul Aziz and Crown Prince Mohammad bin Salman have sent a loud and clear message that they stand with Pakistan through thick and thin and are ready to go to any extent to help bridge over crises. It is all the more satisfying that during visit of the Prime Minister the Saudi leadership reiterated its resolve to invest in different sectors of Pakistan’s economy especially establishment of a huge oil refinery. The Saudi Crown Prince also graciously accepted a suggestion by PM Imran Khan to reduce visa fee for Pakistani workers which is a significant step towards enhancing country’s workforce in Saudi Arabia as well as facilitating travel of people from both the countries.
As per a statement issued by Pakistan after the visit, far-reaching decisions on bilateral economic and financial cooperation were also agreed during the meetings with Saudi leadership. Pakistan has vast mineral resources but is unable to exploit them because of resource constraints and in this backdrop the interest shown by KSA in development of mineral resources of the country would surely make a difference. As Balochistan is particularly rich in minerals, Federal and provincial governments would consult each other before inviting a delegation from the Kingdom to visit for talks on the subject. Talks should also be held with Saudi Arabia for increasing export of manpower from Pakistan and initiating joint ventures. There is also room for substantial investment under Prime Minister’s housing programme and construction of water reservoirs. Credit also goes to the Prime Minister for putting across Pakistan’s case effectively before Saudi leadership and also projecting the country’s point of view on different issues at the investment conference.
The outcome of the visit is first tangible diplomatic success of the Prime Minister and hopefully his visits to China, Malaysia and the UAE would also be productive and result-oriented. Saudi Arabia has also achieved a diplomatic success by organising the three-day investment conference despite boycott by a host of global business leaders and some important countries. The Kingdom succeeded in projecting itself as a lucrative business destination and setting the stage for new ventures and multi-billion dollar contracts. Deals worth more than $50 billion were signed at glitzy investment conference titled “Davos in the Desert”, confirming trust and faith of prospective entrepreneurs in the dynamic programme launched by the Crown Prince to take the Kingdom to new heights of progress and development. The achievements of the moot are a tribute to leadership qualities of MBS, who is coming up with new ideas to bring about a socio-economic change in Saudi Arabia without disturbing its Islamic and cultural identity.

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