Saudi Arabia offers Pakistan $3bn to ease crisis

ISLAMABAD: Saudi Arabia has offered Pakistan $3 billion to help stave off a balance of payments crisis, the Pakistani foreign office said on Tuesday.
Pakistan said Saudi Arabia will place a deposit of $3 billion for one year. The finance ministers of both countries signed a memorandum of understanding to this effect during the Pakistani Prime Minister Imran Khan’s ongoing visit to the Kingdom.
The Kingdom has also offered a one-year deferred payment facility of up to $3 billion for the import of oil.
Pakistan faces a severe balance of payments crisis, with foreign exchange reserves falling to just over $14.6 billion, as of Oct. 12, according to the State Bank of Pakistan. The Pakistani rupee has also lost more than 20 percent of its value since the beginning of this year.
Pakistan’s balance of payments crisis is rooted in the country’s trade imbalance; the country’s oil and energy imports make up nearly a fifth of the import bill contributing to this imbalance. A deferred payment facility like the one offered by the Kingdom should help ease the pressure on the Pakistani economy in the short term.
Pakistani Prime Minister Imran Khan, along with his foreign, finance, and information ministers, is on a two-day visit to Saudi Arabia to participate in the Future Investment Initiative conference, also known as “Davos in the desert.”
Earlier, speaking at the conference in Riyadh, Khan invited attendees to invest in the country and reap benefits.
During the visit, Khan also met with King Salman and Crown Prince Muhammed bin Salman.
The Saudi Government has assured the Pakistani leadership of Saudi Arabia’s commitment to invest in a petroleum refinery in Pakistan, and explore other investment opportunities in the mining sector as well.
Furthermore, the crown prince has agreed to reduce the visa fee for Pakistani workers coming to the Kingdom, in an effort to enhance the Pakistani workforce in the Kingdom.