First Saudi instalment of $1 billion arrives in govt coffers

ISLAMABAD: The PTI-led government has received $1 billion from Saudi Arabia as the first instalment out of the total $3 billion committed by the kingdom to help Islamabad build its balance of payment support.

It is the first breather that the new government has received after its efforts to build up the foreign currency reserves of the cash-strapped country. “Yes, we have received $1 billion from KSA today,” the official spokesman of the State Bank of Pakistan (SBP) confirmed to The News on Monday evening, adding that the remaining amount of $2 billion was expected to be received in the next two months.

Another top official of the SBP said Saudi Arabia provided $6 billion financial package to Pakistan out of which $3 billion was supposed to be provided to the SBP for the purpose of building up the dwindling foreign currency reserves.

“The other $3 billion will be used for the purpose of oil facility on deferred payment for one year, and then Pakistan will repay the amount and be able to get oil facility for another year,” the official said.

This facility would be provided for three years. IT would help Islamabad reduce its import bill, thus slashing down the current account deficit. Many independent economists reminded this scribe that Saudi Arabia had provided oil facility on deferred payment to Pakistan following nuclear explosions in 1998. It had continued for several years, but later the due amount was waived off.

However, the kingdom dislikes publicity in this regard. In 1998, during former premier Nawaz Sharif’s tenure, when information about the oil facility was leaked, the situation had turned embarrassing for the Saudi Kingdom’s representative in the International Monetary Fund’s executive board.

Saudi’s prefer to play this matter down as much as possible for both sides. Pakistan’s foreign currency reserves stood at $13.83 billion out of which the reserves held by the SBP were $7.48 billion, while commercial banks possessed $6.34 billion. The foreign currency reserves held by the central bank decreased by $196 million to $7.483 billion by November 9, 2018 due to repayment of debt servicing and other obligations.

The consistent decline in foreign currency reserves and non-availability of dollar inflows had put pressure on exchange rate, and the rupee continued to slide against the dollar in a gradual manner. With the help of $1 billion inflows for building up reserves, the exchange rate stability could be achieved at least in the coming couple of weeks.

Though gradual adjustment of exchange rate might continue, the central bank would be in a position to avoid sharp decline in the currency market. Pakistan’s economic managers have been continuously briefing the visiting IMF team in which they informed the fund that the financing gap narrowed down in the wake of the Saudi facility.

“We may seek $6 billion package from the IMF with the possibility of keeping size of the programme on the lower side,” said one top official of the economic team while talking to The News.