Saudi Arabia has agreed, in principle, to resume deferred oil facility to Pakistan. The facility will be $3 billion per annum and will be offered for an extended period. However, the details of modalities are yet to be finalized, a national daily reported on Wednesday.
The Federal Minister for Information and Broadcasting, Fawad Chaudhry, also confirmed this to the media. The announcement comes after Prime Minister Imran Khan’s recent visit to Saudi Arabia, during which he made a fresh request for the resumption of the Saudi Oil Facility (SOF).
This is part of Pakistan’s efforts to avoid external account problems and find alternatives to the International Monetary Fund’s (IMF) demands of tariff hike and higher taxes. The resumption of this SOF can make a notable difference in that pursuit.
Before this, Saudi Arabia has offered a $6 billion financial package to Pakistan in July 2019, with $3 billion deposits into the State Bank of Pakistan (SBP) and $3 billion as an oil facility on deferred payment. This package had been offered for three years following the visit of Saudi Crown Prince Mohammad Bin Salman to Pakistan.
While initially, it was agreed between both countries that this facility would continue for three years, with the possibility of rollover, but then it got suspended. Pakistan could only utilize about 30 percent (or $1.5 billion) in the fiscal year 2019-20 from this facility.