ISLAMABAD (AP) — Prime Minister Imran Khan’s decision to attend a Riyadh investment conference despite the outcry over the killing of a Saudi journalist has coincided with an agreement for a $6 billion assistance package…
ISLAMABAD (AP) — Prime Minister Imran Khan’s decision to attend a Riyadh investment conference despite the outcry over the killing of a Saudi journalist has coincided with an agreement for a $6 billion assistance package from the oil-rich kingdom, a crucial infusion of cash as Pakistan grapples with a soaring deficit.
Analysts say the Saudi infusion will allow Islamabad to breathe a little easier as it seeks a critical loan from the International Monetary Fund to address its $18 billion deficit.
The deal was signed Tuesday by Pakistan’s Finance Minister Asad Umar and his Saudi counterpart, Muhammad Abdullah Al-Jadaan, on the sidelines of the Saudi conference. The two countries have longstanding ties.
Khan attended the high-profile conference despite calls from Pakistani rights activists to boycott it in protest at the killing of Jamal Khashoggi in the Saudi Consulate in Istanbul earlier this month.
Several prominent Western executives and officials pulled out of the gathering, known as the Future Investment Initiative, which was the brainchild of Saudi Crown Prince Mohammed bin Salman.
Khan, who was elected earlier this year, inherited an economy in shambles, with foreign exchange reserves barely sufficient to cover a month’s worth of the country’s import bills.
Local news organizations quoted Khan as saying that Pakistan could not afford to boycott the conference, although he did denounce the killing of Khashoggi.
In a televised address Wednesday, Khan said he secured a “great package” from Saudi Arabia. He said Pakistan was at risk of going into default if it did not secure aid from friendly countries as well as the IMF, and that without the Saudi aid, the country would have had to seek a much larger bailout from the global lender.
The Saudi financial infusion provides Pakistan with an immediate $3 billion to bolster its foreign exchange reserves, the Foreign Ministry said. Pakistan is to return the $3 billion after one year, but the terms are apparently negotiable.
Pakistan is also to receive $3 billion in oil imports on a buy-now-pay-later basis under the Saudi deal. Currently, Pakistan imports more than 1 million barrels of Saudi oil a day at an annual cost of $3 billion.
The assistance package will put Pakistan in a better bargaining position going into negotiations with the IMF, said Tariq Yousuf Khan, an economics professor in the southern port city of Karachi.
Pakistan is seeking an $8 billion to $11 billion IMF bailout package. An IMF delegation is expected in Pakistan next month.
Associated Press Writer Kathy Gannon in Kabul, Afghanistan, contributed to this report.