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ISLAMABAD – The new Pakistani Prime Minister has withdrawn from a controversial Saudi economic conference with a financial commitment of at least $ 6 billion to help the country cope with a balance of payments crisis announced the Pakistani government.
Imran Khan, elected in July, was one of the participants in the presentation conference of the Future Investment Initiative in Riyadh, an event to which many Western officials and officials withdrew after the death of Saudi journalist Jamal Khashoggi at the consulate of the Kingdom. in Istanbul this month.
The Saudis claim that Khashoggi's death is the result of a hand-to-hand fight against Saudi security agents, but Turkey has claimed it was a premeditated murder.
Saudi Crown Prince Mohammad bin Salman telephoned Mr. Khan last week to ask him to participate, the Pakistani government said.
Pakistan has started talks on a rescue plan with the International Monetary Fund this month. The IMF loan is still expected, but Saudi aid is helping it in its negotiating position, Pakistani officials said. Pakistan needs about $ 12 billion to fill its funding gap, the government said.
It was not clear whether there was a geopolitical price for Saudi aid. In September, Mr. Khan also traveled to Saudi Arabia in the hope of obtaining financial assistance, but none was announced at the time. A Pakistani minister suggested that the obligations imposed by any Saudi money would be in conflict with Pakistan's "strategic interests".
In 2015, Pakistan declined Riyadh's invitation to join Saudi Arabia's war against Houthi rebels in Yemen. However, Islamabad then sent 5,000 troops to Saudi Arabia to strengthen the country's internal defenses.
Mr. Khan took advantage of his visit to the conference to meet Saudi King Salman and the Crown Prince.
The network of economic ties between the United States and Saudi Arabia is so complex that it can complicate diplomacy in troubled times. Shelby Holliday of the WSJ examines the different ways in which the United States and Saudi Arabia are economically linked.
As part of the deal, Pakistan will receive a $ 3 billion deposit from its central bank for one year as balance of payments support, the Pakistani Foreign Ministry said. In addition, Pakistan will be able to import up to $ 3 billion worth of oil from Saudi Arabia on a deferred payment over the next three years.
Mr. Khan inherited an economy characterized by a growing balance of payments deficit, which depleted the country's foreign exchange reserves to critical levels. Pakistan has foreign exchange reserves worth about $ 8 billion, while debt repayment for the current fiscal year is $ 9 billion. The trade deficit must also be financed.
The Pakistani Prime Minister confessed that the country was "desperate" for funds on the eve of his trip to Saudi Arabia, in an interview with the Middle East Eye website, claiming that he had "no one" to pay. 39 other choice than to ask for help in Saudi Arabia. He described the journalist's death as "sad beyond belief" in the interview published on Monday.
"Unless we get loans from friendly countries or the IMF, we will not have in two or three months the necessary currency to repay our debts or pay our imports. So we are desperate for the moment, "Khan told Middle East Eye.
In addition, Islamabad is in talks with Saudi Arabia on the construction of a multi-billion dollar refinery in the new port of Gwadar, Pakistan, and on Saudi investments in major mining projects in Pakistan.
While Islamabad has long been close to Saudi Arabia, it has also made sure not to upset Iran, its regional rival, with whom Pakistan shares a long and largely peaceful border. Pakistan's other two main borders, with Afghanistan and India, are tense and hundreds of thousands of Pakistani troops are mobilized there.
Write to Saeed Shah at [email protected]
