Wednesday June 12, 2024

Pakistan may not get $2 bn rollover from Saudi Arabia

Pakistan would have to explore other options to manage $2 billion through commercial or Chinese loans

By Mehtab Haider
November 10, 2020

ISLAMABAD: Saudi Arabia has indicated that it might refuse a rollover of $2 billion to Pakistan. Islamabad has already started exploring options to manage the amount from other avenues to avert the dwindling foreign currency reserves. On the issue of $2 billion loan deposits from the UAE, there is no new development so far, as its maturity will become due after a couple of months.

Official sources confirmed on Monday that Islamabad had forwarded a formal request for granting a rollover of $2 billion to the Kingdom of Saudi Arabia with the hope that this arrangement would continue for another year under the requirement of the IMF programme. The formal response is still being awaited from KSA, official sources said.

The Pakistani authorities are expecting that KSA’s top leadership would give a formal response within the next few weeks. After the recent posting of Special Secretary Finance Mohsin Chandana to the Communication Ministry, the Ministry of Finance has not yet notified the appointment of an official spokesman to talk about the issue.

When contacted, the official sources said that when Islamabad had forwarded its formal request, there was a hope that Riyadh would grant another rollover but now there were indications otherwise, so Pakistan would have to explore other options to manage $2 billion through commercial or Chinese loans to avert reduction in the foreign exchange reserves.

This scribe contacted another top official who commented briefly by stating “the matter involves bilateral confidentiality so let’s leave at that please”. Other official sources said that KSA’s top leadership kept such decision close to chest and it did not like disclosure of any such thing ahead of its due date. But through backdoor diplomatic channels, it had been conveyed to Islamabad to manage financing of $2 billion because KSA was not going to grant a rollover for another year.

When Saudi Arabia had asked Pakistan to return $1 billion prior to its due date, Islamabad had to obtain it from China. Now the Pakistani authorities have been left with two remaining options either to manage commercial loans or obtain $2 billion more from China.

Pakistan’s foreign currency reserves held with the SBP stood at $12.18 billion out of which around $10 billion were in shape of foreign loans or swaps obligations. If the IMF includes in it, the foreign exchange turns into negative so vulnerabilities on external account are increasing with every passing day.