Pakistan secured a lifeline of approximately $4 billion on Thursday from Saudi Arabia and the United Arab Emirates amid mounting economic woes, the challenge of a sovereign default, rapidly shrinking foreign exchange reserves and massive flood damages.
During the ongoing two-day visit of Prime Minister Shehbaz Sharif to the Gulf state, the United Arab Emirates, in two separate official announcements, vowed to defer the payment of a $2 billion loan payable over the upcoming two months of February and March, then outdid this with an additional $1 billion support for the country.
The rollover will now provide the government with an opportunity to revive the IMF program over the next few days, steadily build back forex reserves, and end the tight control on imports that has severely damaged the manufacturing sector and created a scarcity of vital items.
On the other hand, the Saudi Fund for Development (SFD) separately signed an accord in Islamabad to supply $1bn worth of oil imports on delayed payment.
The agreement was signed by SFD Chief Executive Officer Sultan Abdulrahman Al-Marshad and Ministry of Economic Affairs Secretary Dr Kazim Niaz, according to the ministry.
“The agreement marks the latest steps taken by the government of Saudi Arabia through the SFD and the Pakistani authorities to enhance development in the country,” the statement said.
It added that the contract was a formal execution of the commands from Saudi King Salman bin Abdulaziz and Crown Prince Mohammed bin Salman to assist Pakistan in challenging times.
PM meets Arab investors
Prime Minister Shehbaz Sharif also met a delegation of Arab investors in Abu Dhabi after the UAE’s announcement of an additional loan of $1 billion for Islamabad. “A delegation of Investors of United Arab Emirates called on Prime Minister Muhammad Shehbaz Sharif in Abu Dhabi,” the Prime Minister’s Office (PMO) said in a statement.
Mohammed Hassan Al-Suwaidi, the chief executive officer of Abu Dhabi Developmental Holding Company, and Syed Basar Shueb, managing director of International Holdings Company (IHC) were part of the delegation along with other key members.
According to the PMO’s statement, the prime minister told the delegation that Pakistan has excellent investment opportunities and the government is taking all necessary measures to facilitate investors.
“They stressed the importance of intensifying and strengthening communication between the private sector of the two countries in order to discuss trade and investment opportunities and turn these into tangible partnerships,” the PMO said.