ISLAMABAD, June 10: Saudi Arabia has expressed its inability to revive the $550 million annual "Saudi oil facility" for Pakistan because of increasing financial difficulties.

Informed sources told Dawn here on Thursday that the government needed a roughly Rs50 billion external support to adequately fund its budget for 2004-05 being estimated at Rs1 trillion (Rs1,000 billion).

It was in that backdrop the government has taken up the issue afresh with the Saudi authorities so as to get the Saudi oil facility revived. Saudi Arabia had initially started offering this facility amounting to $1 billion (100,000 barrels of oil) to Pakistan, which was later halved to about $550 million. The support came when Islamabad had decided to go nuclear in 1998.

"Saudis provided us this huge amount for over six years and this was their great support, specially when we were facing serious international sanctions," a senior official told Dawn.

He said the Saudi oil facility ended in October 2003 about which Pakistan was duly informed. "I cannot say whether this issue was raised during Prime Minister Zafarullah Khan Jamali's recent visit to Saudi Arabia," he said.

However, he said that since the kingdom was experiencing financial difficulties first due to the Gulf War of 1990 and now because of the US occupation of Iraq, Islamabad did realise that it should not expect continued support in the shape of oil facility.

"We did not pay a penny for having such huge Saudi support for more than six years," he said. The official said the government should now be in a position to fund its new budget, specially after having increased its revenues from Rs460 billion to Rs510 billion in 2003-04.

Now the revenue projections of Rs580 billion was being estimated for the fiscal year 2004-05. However, the official cited a view of the World Bank, which had been communicated to Islamabad, that Pakistan's revenue mobilization had been slow, both by international standard and compared with its potential.

Although revenue collection during the last two years increased sharply to 17.9 per cent of GDP in 2002-03, still the revenue mobilization falls short of that many developing countries at comparable income levels in Africa, Asia and Latin America.

The World Bank believes that in the light of the weaknesses in the current revenue mobilisation system, there is a considerable scope for enhancing collection and broadening the income tax base.

For instance, while there are only 1.2 million income tax filers, there are three million cell phone subscribers, over 10 million electricity consumers, 3-4 million gas consumers and 2-3 million car owners.