ISLAMABAD: Saudi Arabia has agreed to revive its financial support to Pakistan, including about $3 billion in safe deposits and $1.2bn to $1.5bn worth of oil supplies on deferred payments.

An agreement to this effect was reached during the visit of Prime Minister Imran Khan to the kingdom this week, a senior government official told Dawn. However, a formal announcement would be made by PM’s adviser on finance and revenue Shaukat Tarin and Energy Minister Hammad Azhar on Wednesday at a news conference.

The development was later confirmed in a midnight tweet by Information Minister Fawad Chaudhry. “Saudi Arabia [has] announcement [sic] support [for] Pakistan with 3 billion US dollars as deposit in Pakistan central bank and also financing refined petroleum product with 1.2 billion US dollars during the year,” he wrote.

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.

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.

Published in Dawn, October 27th, 2021