PKONWEB/BE2C2 Report: The United Arab Emirates (UAE)and Kingdom of Saudi Arabia–Middle East’s two biggest economic powerhouse and close allies of Pakistan have thrown a combined $12.4 billion lifeline to PM Imran Khan’s newly formed government to shore up the country’s fiscal conditions.
UAE has finalized the terms and conditions of its financial assistance package of about $6.2 billion which includes $3.2bn worth of oil supplies on deferred payment, and a $3bn cash deposit to help Islamabad address its balance of payments challenge.
The UAE’s unprecedented deal to Pakistan is expected to be announced by Crown Prince Sheikh Mohammed bin Zayed Al Nahyan during his two-day visit to the country starting on Sunday (Jan 6). It will help PM Khan and his team firefight the situation as it lays out its cards to the IMF for a better and more flexible bailout program expected to be finalized between January and March.
A cabinet member told local daily Dawn that UAE’s package was exactly of the same size and terms and conditions as given by Saudi Arabia. The UAE package was finalized on Thursday evening, he said.
With this, Pakistan would get a total saving of about $8bn on oil and gas imports from the two friendly countries — accounting for more than 60 per cent of annual oil import bill of about $12-13bn.
This is in addition to a deep-conversion oil refinery to be set up by Parco — a joint venture of Pakistan and Abdu Dhabi — worth $5-6bn at Khalifa Point and an expected petro-chemical complex by Saudi Arabia at Gwadar Oil City.
On top of that, the government has also started backchannel discussions with Qatar for relief in terms of reduction in LNG prices or a relaxed payment schedule.
With support from Qatar, Pakistan is expecting about $9bn cushion in total oil and gas import bill.
The country’s fiscal condition deteriorated over the years due to dwindling forex reserves, growing external financing gap, imports and a whopping trade deficit.
For example, during the last financial year 2017-18, Pakistan ratcheted a record current account and trade deficit of $18 billion and over $37.5 billion respectively during the period (2018-2019). Also, imports skyrocketed to almost $61 billion, while exports failed to keep pace and booked at $23.23 billion.
The UAE and Saudi assistance will help Pakistan successfully overcome international payments crisis and avoid a stringent International Monetary Fund (IMF) bailout package, say experts.
Pakistan may also obtain at least $2 billion short-term loans from China after the Joint Coordination Committee (JCC) meeting in Beijing concluded, reported Pakistan Today.