Pakistan seeks maturity extension of S Arabia’s $3bn

ISLAMABAD: Saudi Arabia has not asked for withdrawal of its deposit of $3 billion from the State Bank of Pakistan (SBP), rather Pakistan has requested the Kingdom to extend its maturity, it has been learnt.

Pakistan is also going to request the IMF’s mission chief to send their review mission to Islamabad or hold virtual meetings next week to strike a staff-level agreement with the Fund before the announcement of the budget for financial year 2022-23.

"We will hold a meeting with the IMF mission chief on Friday-Saturday keeping in view the time difference with Washington D.C. for finalising the schedule of the IMF’s review mission,” a top official said.

However, independent economists suggested that without reversing energy subsidies, the IMF would not send its mission to Pakistan. The government would have to hike POL [petrol, oil, lubricants] and electricity prices as prerequisite, which will pave the way for resuming parleys with the IMF on completion of the pending 7th Review under the $6 billion Extended Fund Facility (EFF). The KSA’s additional package up to $8 billion is also linked with the revival of the IMF programme, said another top official.

Without the restoration of the stalled IMF programme, it will be hard for the government to manage the depleting foreign currency reserves. “Our government is cognizant of the fact that the country requires injections of $5 to $7 billion inflows till June 2022 in order to avert further depletion of foreign exchange reserves,” a close confidant of the finance minister told this reporter and added that if such inflows could not be managed, then the economic woes might multiply.

When a top official of the Shehbaz Sharif-led government was contacted on Friday and asked about the rumours about the Kingdom of Saudi Arabia withdrawing its $3 billion deposits from the SBP, the official replied, "They have not [asked for it]. We have asked them to extend maturity. It's a precautionary move to protect the forex reserves”.

Pakistan sought $8 billion package from the KSA during the recent visit of premier Shehbaz Sharif and details are being worked out. The KSA has agreed in principle to extend an additional package, but the Pakistani authorities claim they wanted to finalise the modalities first and then it would be the right of KSA to announce it formally.