KSA transfers partial amount out of $4.2bn for Pakistan’s balance of payment, oil financing

ISLAMABAD, Oct 27 (APP):Advisor to Prime Minister on Finance and Revenue, Shaukat Tarin on Wednesday said that Saudi Arabia has transferred partial amount out of the total $4.2 billion, it had announced for Pakistan to overcome its balance of payment and oil financing.

“Yesterday I received call from finance minister of the Kingdom, who told me that we are going to release the money right now… for your information, and I think some amount was released yesterday,” he said.

Addressing a press conference along with Federal Minister for Energy, Hammad Azhar, the advisor said that US$3 billion would be placed with the State Bank of Pakistan to help balance of payments and $1.2 billion would be provided as oil supplies on deferred payment.

The minister said that the Crown Prince of Saudi Arabia had told him that Pakistan and Prime Minister Imran Khan hold special place for the Kingdom, so he (Crown Prince) was pleased to do this. He said that the Saudi Finance Minister also telephoned him on Tuesday and informed him about the support. The advisor said that some of the amount had already been released on Tuesday. He informed that the rate of interest on the loan would be 3.2 percent.

Talking about the inflation, the advisor said that oil prices in Pakistan were the lowest as compared to other countries, including regional ones, except the oil producing countries.

He said, keeping in view the purchasing power parity, Pakistan was one of the cheapest countries in the world. He said, although income was low, the prices of commodities were also low as compared to the other counties of the world.
The Minister categorically denied having any link between the Saudi Arabia’s this extended facility and International Monetary Fund (IMF) programme.

He said that talks with IMF were nearing successful completion and assured that within couple of days the programme would be finalized. He said that the agreement had already been made before he flew from Washington.

He said that with the $4.2 bln Saudi Arabian Facility and upcoming agreement with the IMF would have positive impact on market, so there should be no uncertainty.

Meanwhile, speaking on the occasion, Federal Minister for Energy, Hammad Azhar informed the reporters that the inflation was a global phenomenon as the whole world was passing through commodity cycle. Owing to Covid-19, almost all the countries gave stimulus packages which had paced up economy at a time when production was hit by shutdowns to prevent Coronavirus, he added.

So every country, irrespective of being poor or rich, witnessed hike in commodity prices, he remarked.
He also pointed out that oil prices in Pakistan were low, except the oil producing countries, whereas the gas prices were not increased since 2019, which have gone up by five to ten-fold in European countries.

Likewise, he added prices of Urea fertilizer were low whereas the government had to provide Rs 450 billion tax relaxations to lower the burden of increasing oil prices in international marker.

He expected that the world commodity cycle would break within around 6 months and the prices in world market would come down leaving positive impact on inflation in Pakistan.

On Financial Action Task Force (FATF), he said that Pakistan has made tremendous progress on two simultaneous plans. He said, the country had completed 26 out of 27 action points of earlier plan and majority of the FATF members had expressed satisfaction made over the remaining one point.

Likewise, out of 7 points of FATF June plan 4 have been completed, which he said was history in FATF to have completed 50 percent of action plan in first review.