Pakistan has reached out to Saudi Arabia, urging it to provide a $1 billion oil facility on deferred payment for the calendar year 2024. However, the KSA has not given any confirmation to the cash-strapped Asian nation.
The request by Pakistan to Saudi Arabia was made at a time when it was set to hold review talks with the International Monetary Fund (IMF).
Pakistan has made a formal request for $1 billion Saudi Oil Facility (SOF) on deferred payment with effect from January 2024. The Kingdom of Saudi Arabia (KSA) has not yet given its confirmation, and its exact modalities will be worked out within the next couple of months, including attached cost and other terms and conditions,” a report by The News quoted sources a saying.
As per reports, the facility is part of the financing plan agreed upon and worked out with the IMF by Pakistani authorities as part of the $3 billion Standby Arrangement (SBA).
The existing facility is scheduled to expire in December of this year.
Saudi’s disbursement to Pakistan
Under the existing SOF, a total disbursement of $700 million had been made by KSA from March to September 2023, and it was hoped that another $300 million might be disbursed by the end of December 2023.
The report quoted another official saying under the ITFC mechanism, Islamic Development Bank (IsDB) has pledge of $3.3 billion. As part of the pledge, the bank was supposed to provide $1 billion during the current fiscal year.
The bank, however, has now indicated that it may cut down from $1 billion to around $250–500 million in syndicated loan facilities for the current fiscal year.
During a conversation with Pakistani authorities, the IsDB team cited several reasons for the decision including difficulties in generating dollar loans from international financial institutions because of high interest rates across the world.