The government has failed to secure $3.2 billion oil credit facility from the United Arab Emirates (UAE), confirmed a media report.
This development has been announced by Finance Minister Asad Umar, according to the media outlet. “Most probably, the UAE oil facility agreement will not materialize,” said Umar while adding that the government has made other arrangements to cope with the external financing needs for the current fiscal year.
While the reason for UAE’s cancellation of the oil facility could not be determined, the scenario does not bode well for the country’s foreign currency reserves.
It is worth mentioning here that the UAE had earlier postponed a scheduled meeting of the Joint Ministerial Commission. In December, the UAE had announced a $6.2 billion package for Pakistan to help it deal with financing gap. The $3.2 billion oil facility was part of this package.
The Emirates has already sent $2 billion in cash to Pakistan while another $1 billion was expected soon. The oil facility was solicited when the UAE crown prince visited Pakistan. Later, it was sought in February but could not materialize both times.
According to the Finance Minister’s reply submitted in the Senate, Pakistan has attained UAE’s cash support for two years at an interest rate of 3 percent while the cash assistance from Saudi Arabia is secured at 3.2 percent interest rate.
Foreign Ministry’s spokesperson and advisor, Dr. Khaqan Najeeb, has told that the International Islamic Trade Finance Corporation (ITFC) deferred facility has been operationalized and is expected to offset the impact of a delay or cancellation of the UAE facility.
He further said that the $3.2 billion Saudi oil deferred facility is also being operationalized with all relevant agreements in effect.