ISLAMABAD - Pakistan on Friday has received the second tranche of one billion dollar from Saudi Arabia while the first tranche had already been utilised in less than one month period due to external debt servicing and other official payments.
“The State Bank of Pakistan has received the second tranche worth one billion dollar from Saudi Arabia that would help build the declining foreign exchange reserves of the country,” said an official of the ministry of finance. He further said that remaining third tranche is expected to receive in next month (January 2019). Earlier, Pakistan had received the first tranche of one billion dollar in mid November.
Pakistan in mid October had succeeded in getting $6 billion package from Saudi Arabia to avert the balance of payment situation. Under the package, Saudi Arabia would place $3 billion cash deposits in the account of State Bank of Pakistan. In addition, it would also provide a one-year deferred payment facility for the import of oil, worth up to $3 billion. Prime Minister Imran Khan had visited Saudi Arabia twice to seek the financial package from Saudi government to improve its balance of payment situation.
The second tranche will also help take the foreign exchange reserves to $8.3 billion, which are currently $7.3 billion. “During the week ending 07 December2018, SBP’s reserves decreased by US$242million to US$7,260.4million due to external debt servicing and other official payments,” according to the SBP. Pakistan had received one billion dollar from Saudi Arabia in mid November, which took the SBP’s reserves to $8.29 billion. However, the reserves had tumbled by around one billion dollars in last three weeks to $7.26 billion. “The reserves are under pressure due to massive repayment on previous loans,” said an official of the State Bank of Pakistan. He added that SBP was compelled to depreciate the currency to reduce the pressure on foreign exchange reserves.
The reserves would remain under pressure during ongoing fiscal year due to external payment. Pakistan had already requested two friendly countries China and UAE for filing the financing gap on external account. The official said that technical talks with China and UAE are in advanced stage and it might finalize within December 2018. Pakistan had asked United Arab Emirates (UAE) for providing similar kind of oil facility on deferred payment up to $3 billion on the basis of one year as being finalized by Kingdom of Saudi Arabia.
Similarly, Pakistan had approached International Monetary Fund (IMF) for bailout package. However, talks between Pakistan and the IMF remained inconclusive after both the sides could not bridge the gulf on issues of increase in electricity prices, hike in interest rate, rupee devaluation and tax collection targets.