Pakistan’s Islamic Diplomacy: Economic Aid Pours From Saudi, UAE, Qatar

Under economic stress, Pakistan has succeeded to evade harsh IMF bailout package, so far, and successfully managed to secure hefty laid package from Saudi Arabia and the UAE. There are are some back-channel discussions with Qatar going on, as per reports.

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The latest aid package to Pakistan comes from the United Arab Emirates (UAE) who has agreed to finance $6.2 billion support package to assist Islamabad to address its balance of payments challenge.

The package involves $3.2 billion worth of oil supplies on deferred payment, besides a $3 billion cash deposit. It is expected to be announced by Crown Prince Sheikh Mohammed bin Zayed Al Nahyan during his visit to the country starting Sunday.

According to a Pakistan government official, the package was finalised on Thursday evening and was similar to the one given by Saudi Arabia.

With this, Pakistan would get a total saving of about $7.9 billion on oil and gas imports from the two countries, accounting for more than 60 per cent of annual oil import bill of about $12-13 billion, he said.

This included about $3.2 billion each of oil supplies on deferred payments from the UAE and Saudi Arabia and about $1.5 billion trade finance from the International Islamic Trade Finance Corporation (ITFC).

The total financing support from the UAE and Saudi Arabia, including the ITFC’s trade finance, would be around $14 billion when cash deposits of $3 billion each from the two countries were also included, the official said.

This is in addition to a deep-conversion oil refinery to be set up by Parco — a joint venture of Pakistan and Abu Dhabi — worth $5-6 billion and an expected petrochemical complex by Saudi Arabia.

The government also started back-channel discussions with Qatar for some relief in terms of reduction in LNG prices or a relaxed payment schedule, but that was at an early stage, the daily said.

Pakistan has already received $2 billion in cash deposit from Saudi Arabia at an interest rate of 3.18 per cent while the third tranche of $1 billion was due in the first week of February. The Saudi oil facility would also start rolling out this month with an average $274 million per month.

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