Saudi cash finance soon: Dar

Pakistan is hoping to conclude talks with Saudi Arabia soon on financial help for the country, Finance Minister Ishaq Dar said on Monday.

Dar also told a news conference that the International Monetary Fund (IMF) had asked Pakistan for more information to finalise its ninth review.

"We hope that we will soon conclude talks, which we have started with Saudi Arabia," he said in response to a question whether there was any progress on seeking financial support from the kingdom.

Pakistan's economy is facing a balance of payment crisis, with central bank reserves having fallen to $6.7 billion – hardly enough for a month of imports – and the current account deficit having widened.

With the IMF's ninth review delayed, Pakistan needs external financing on an urgent basis.

As the review is awaited, Pakistan has been trying to approach allies to seek financial support, and Dar had said that he would expect to get $3 billion from a friendly country.

Earlier on December 8, The Express Tribune reported that the government had requested Saudi Arabia to urgently provide $3 billion in cash after its foreign exchange reserves fell to a critically low level, as the new army chief was also expected to play a role in bagging the bailout during his upcoming maiden visit to the Kingdom.

The current reserves stand at around $6.7 billion, which is almost equal to $6.6 billion on January 18, 2019.

The $6.7 billion reserves are not enough to service the $8.8 billion principal and interest payments during the January-March period of the current fiscal year, according to the sources.

In the first week of November, the finance minister had said Pakistan received “assurances of a $13 billion financial package from China and Saudi Arabia, including $5.7 billion in fresh loans”.

They included $4.2 billion from Saudi Arabia and $8.8 billion from China.

However, no progress could be made during the past one month and instead the country paid back two commercial loans of China totalling $1.2 billion.

The $13 billion package is equal to 38% of the estimated gross external financing requirements of the country for the fiscal year 2022-23.

Its materialisation can eliminate the threat of default, as the IMF has not come up with a major financial package despite imposing numerous harsh conditions.

Pakistan is again looking towards friendly countries as it has been unable to revive the $6.5 billion IMF bailout package -- derailed for the fourth time in three years.

The IMF has not yet finalised the dates for the staff-level talks – much needed to acquire the next loan tranche of $1.2 billion.

Pakistan has estimated that it would receive $6.2 billion in foreign commercial loans, down from the previous estimate of $7.5 billion. This money was not received during the first quarter.

Of the estimated foreign commercial loans of $6.2 billion, $3.5 billion will come from China. The remaining $2.7 billion will be provided by non-Chinese foreign commercial banks having shorter maturity periods. 

(With additional input from News Desk)