ABU DHABI: Just a week after a second tranche of $1 billion in financial assistance from Saudi Arabia under $6 billion package was received by Pakistan, the United Arab Emirates on Friday announced its intention to deposit $3 billion in the State Bank of Pakistan (SBP) within the next few days to support the country’s foreign currency reserves and help enhance liquidity.

The announcement by the UAE state-run media, which came at a time when Pakistan has been engaged in bailout talks with the International Monetary Fund (IMF) while battling to control a gaping current account deficit that has wobbled its economy and lowered growth, was promptly welcomed by Prime Minister Imran Khan while federal Information Minister Fawad Chaudhry said Islamabad also hoped the UAE would allow deferred payments for oil supplies.

PM Khan tweeted: “I want to thank the UAE govt for supporting Pakistan so generously in our testing times. This reflects our commitment and friendship that has remained steadfast over the years.”

PM Imran thanks emirate for generous support; information minister seeks deferred payments on oil supplies

The UAE’s state-run media WAM quoted the Abu Dhabi Fund for Development (ADFD) as saying it would deposit the amount in the “coming days”. It said the amount was meant “to support the financial and monetary policy of the Islamic Republic of Pakistan”.

“The country’s support for Pakistan’s fiscal policy is based on the historical ties between the two people and the two friendly countries and the desire to further develop the bilateral cooperation in all fields,” it added.

The ADFD has financed eight development projects in Pakistan with a total value of AED1.5 billion, including AED931 million in grants. The funds covered projects in the energy, health, education and road infrastructure sectors.

Hours after the landmark announcement, the information minister told a news agency that Islamabad was “also hoping to get deferment for oil payments” from the UAE.

Mr Chaudhry declined to disclose the sum of assistance sought through deferred payments, but said this was part of the discussions that led to the UAE announcing it would deposit $3 billion in the SBP.

The minister said the UAE also planned to make investments in Pakistan including in [the establishment of] a refinery and desalination plants.

Pakistan is facing a widening balance of payments crisis. The rupee plunged almost five per cent to a record low at the end of November, after what appeared to be a sixth devaluation by the SBP in the past year.

Meanwhile, Foreign Minister Shah Mehmood Qureshi thanked the UAE rulers for the “generous financial support”. In a tweet, he stated: “We thank Crown Prince H.H @MohamedBinZayed for his generous financial support of US$ 3 Billion. This is a manifestation of the close fraternal ties between Pakis­tan & UAE which have always stood the test of time.”

Only last month a team from the IMF visited Pakistan for talks with officials on a possible bailout but the discussions ended without any agreement. Pakistan had last received an IMF bailout in 2013 to the tune of $6.6 billion.

‘$2bn from S. Arabia soon’

Meanwhile, Minister of State for Revenue Mohammad Hammad Azhar said the Pakistan Tehreek-i-Insaf-led government expected another tranche of financial assistance from Saudi Arabia.

While talking to a private news channel, the revenue minister said the PTI-led government expected to receive $2 billion assistance from Saudi Arabia after getting $3 billion from the UAE in near future. He said the government’s team under the leadership of Finance Minister Asad Umar was successfully overcoming the economic crisis.

Earlier in October, the Pakistan Tehreek-i-Insaf-led government also secured $6 billion in funding from Saudi Arabia and struck a 12-month deal for a cash lifeline during PM Khan’s visit to the kingdom.

Since the formation of government in August, Pakistan has asked its allies including China, Saudi Arabia, the UAE and Malaysia for assistance to help reduce a widening balance of payment crisis.

Published in Dawn, December 22nd, 2018