KARACHI: Pakistan has utilized $375 million out of $4.5 billion oil financing facility extended by the Saudi-led Islamic Development Bank, officials said, part of a package to support dwindling public finances and avert a balance of payments crisis.
Pakistan announced last year that the Islamic Development Bank was providing it a three-year, $4.5 billion oil financing facility and Pakistan would receive $1.5 billion worth of oil on deferred payments each year.
“The facility has been operationalized and Pakistan has already utilized $375 million out of the $4.5 billion,” Dr. Khaqan Hassan Najeeb told Arab News on Saturday. The facility has been extended to Pakistan by the Islamic Trade Finance Corporation, a member of the Islamic Development Bank group, he added.
“The inflows will ease balance of payments pressure,” Dr. Khaqan said.
In October last year, Saudi Arabia agreed to give Pakistan $3 billion in foreign currency support for a year and a further loan worth up to $3 billion in deferred payments for oil imports to help stave off a current account crisis that had ballooned to over $18 billion in the last fiscal year.
Pakistan has already received $3 billion of the funds in three tranches and the deferred oil facility was also operationalized in January.
Following Saudi Arabia’s lead, the United Arab Emirates also promised $3 billion in support, while China is expected to provide a similar package in the coming days.
The Saudi crown prince is expected to arrive in Pakistan this month to sign off on a range of investment deals, including a $10 billion oil refinery to be set up in the deep-water port of Gwadar.
“A big delegation is coming with the crown prince,” commerce minister Abdul Razak Dawood told Arab News on Saturday. “We will try to sign a memorandum of agreement with the Saudi Arabia to set up refinery in the Gwadar; that is the priority. They will also take part in bidding for two LNG power plants.”
“They are interested in wind power in Sindh and Baluchistan,” Dawood said. “They are interested in setting up a desalination plant in Karachi. I think the combined investment would be around $11 billion to $12 billion.”
