ISLAMABAD, June 5: The government has again put off the announcement of the federal budget — this time by one day to June 11 — apparently because it is waiting for Saudi Arabia’s response to a request for concessions on payments on oil imports.
Finance ministry officials say the date has been changed due to the revision in the schedule of Prime Minister Yousuf Raza Gilani’s visit to Saudi Arabia, now set for June 6-8.
This is expected to be one of the most important topics on the agenda for talks between the two countries.
Officials in Islamabad, however, were of the view that oil was the main purpose of the prime minister’s visit to Saudi Arabia.
Saudi Arabia had started supplying oil to Pakistan at a rate of about $1 billion per year in 1998 under a special financing arrangement commonly known as Saudi Oil Facility (SOF). Initially the SOF was for two years, but was later extended for another year. It was discontinued in 2003.
Sources in the petroleum ministry said the prime minister might also request Saudi Arabia to supply crude to Pakistan on discount in case Riyadh did not agree to a revival of SOF.
According to the sources, the last option would be that Saudis supplied oil on deferred payments. This means that Pakistan would be allowed to make payments in 90 or 120 days (as the case may be) instead of the usual 30.
Since oil import is the second largest contributor to Pakistan’s import bill, the government is looking for relief on this count. The Saudi government has already committed a one-time $300 million oil facility to offset the impact of the import bill.
Sources quoted two other reasons for extending the budget date. They say it is also possible that some legislators belonging to the treasury benches may join the lawyers’ long march on June 10.
According to officials, the government estimates that the oil import bill would reach $11 billion during the current financial year — 40 per cent more than last year’s $7.9 billion.
The exchequer will suffer an additional burden of Rs160 billion as a result of the steep rise in petroleum prices and the former government’s reluctance to pass on the impact to consumers.