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ISLAMABAD (Reuters) – Saudi Arabia has agreed to grant Pakistan financial support in foreign currencies of $ 3 billion for a year, as well as a new loan of an amount that can go up to $ 3 billion, intended to defer petroleum imports, the Pakistani government announced on Tuesday.
The $ 6 billion total exceeds analysts' forecasts and will likely reduce the size of Pakistan's bailout package it receives from the International Monetary Fund (IMF), with which it is currently negotiating a bailout.
The Saudi agreement came as Pakistan's new prime minister, Imran Khan, attended a conference on investing in Arabia that was boycotted by several other leaders following the death of a dissident Saudi writer at the country's consulate in Istanbul.
Before leaving, Khan said his country was "desperately looking" to consolidate its foreign exchange reserves, which are at the lowest level in four years, equivalent to less than two months of imports and barely reimbursed. of his debt through the rest of the Republic. year.
Finance Minister Asad Umar has called for talks this month with the IMF on the country's second bailout in five years. An IMF team is due to visit Pakistan to open negotiations on Nov. 7.
Khan, however, had sought to avoid resorting to the IMF and still wants to at least reduce the size of any bailout by calling on "friendly countries" to obtain bilateral financial support.
Khan had visited Saudi Arabia last month on his first trip abroad since taking office in August, but the trip did not provide any meaningful assistance, despite reports in the Pakistani media that agreements on deferred payments for oil.
The Pakistani Foreign Ministry said Tuesday night that the last visit was a success.
"It has been agreed that Saudi Arabia will deposit a $ 3 billion deposit over a period of one year as balance of payments support," the ministry said in a statement.
"It was also agreed that a one – year deferred payment mechanism for oil imports, of a maximum amount of $ 3 billion, would be provided by Saudi Arabia. This arrangement will be in place for three years and will be reviewed later. "
Khan is due to visit China next week.
Pakistani officials fear that the United States, which has been fighting with Islamabad, is pushing the IMF to impose difficult conditions in Pakistan as part of any bailout package.
Pakistani analysts believe that reducing the size of the rescue package required by the IMF would strengthen Pakistan's weak position in negotiations with the fund.
Written by Kay Johnson and Drazen Jorgic; Edited by David Holmes and Andrew Roche
