Published: Fri, October 26, 2018
Global | By Enrique Rogers

Pakistan to take International Monetary Fund bailout despite Saudi rescue package

Pakistan to take International Monetary Fund bailout despite Saudi rescue package

It confirmed that $3 billion will be deposited by Saudi Arabia as a "balance of payment support", with another $3 billion will be used for oil import payments.

Agreements in this regard were signed on the sidelines of the second edition of the annual Future Investment Initiative (FII) Conference in Riyadh.

It came as Pakistan's new Prime Minister Imran Khan attended the high-profile conference, despite calls from Pakistani human rights activists to boycott the venue in protest of the killing of journalist Jamal Khashoggi in the Saudi Consulate in Istanbul - a slaying that has shocked the global community. The Pakistani PM said the murder of Khashoggi was "shocking" and "sad beyond belief". He said the country's total foreign debt before 1970 stood at Rs30 billion. Pakistan is in search of Dollars 12 billion foreign loans and aid to avoid default on worldwide debt obligations, as the country is required to return USD 11.7 billion loans to foreign countries.

Pakistan's government, led by the cricketer-turned-politician Khan, inherited a mountain of economic challenges when it came to power in July.

The kingdom said it would be willing to place $3 billion (€2.6 billion) with Pakistan's central bank to maintain depleting reserves at a safe level.

Pakistan's Prime Minister Imran Khan left for Saudi Arabia to attend an investment conference boycotted by other leaders over the death of journalist Jamal Khashoggi at the Saudi consulate in Istanbul.

The prime minister says his government will also make a proposal to make Spain a "pioneer" in verification and transparency on arms exports.

The cash assistance will lower the requirements to devalue the rupee, as the one-off assistance will for the time being improve the macroeconomic projections, the report quoted some independent economists as saying.

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He expressed gratitude to Saudi leadership for helping Pakistan at a time of need.

While the "far larger" than expected Saudi windfall won't address all Pakistan's needs it will "help Pakistan to negotiate a smaller loan facility from the International Monetary Fund with less stringent conditions", said Mohammed Sohail, chief executive officer of Karachi-based brokerage Topline Securities Ltd.

Gulf crisis is being spilled over to Pakistan. He said the government has also facilitated mechanism for foreign remittances. Other critics asked whether the Sunni kingdom now expects Pakistani support for its controversial war in Yemen against Shia Houthi groups.

Addressing a ceremony to mark the first joint venture between China and the private sector, Prime Minister Khan said Pakistan has a young population who are in search for jobs. We were under high pressure to pay heavy debts. The Khan government has already told Beijing it wants to renegotiate terms in regard to CPEC.

Saudi Arabia has stepped forward with a $6 billion bailout package for Pakistan's ailing economy.

"The deferred payment for oil is a good development as well".

It also agreed to provide up to the same amount again on deferred payment for import of oil, the announcement added. The current account deficit has swelled to about US$18 billion.

In a tweet on return from Saudi Arabia, the Minister said Prime Minister has been introduced as a man of rules, fearless and courageous ruler in Muslim Ummah. The requirements of Saudi Arabia as part of the deal would be a big question mark.

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