Saudi Arabia transfers partial amount of $4.2bn facility: Tarin

Thursday, Oct 28, 2021

ISLAMABAD: Adviser to Prime Minister on Finance and Revenue Shaukat Tarin said on Wednesday that Saudi Arabia had transferred partial amount out of the total $4.2 billion it had announced for Pakistan to overcome its balance of payment and oil financing.

“Yesterday I received call from finance minister of the kingdom, who told me that they are going to release the money right now… for your information, and I think some amount was released yesterday,” he said.

Addressing a press conference along with Energy Minister Hammad Azhar, the adviser said US$3 billion would be placed with the State Bank of Pakistan (SBP) for balance of payments and $1.2 billion would be provided for oil supplies on deferred payment.

Tarin said Saudi Crown Prince Mohammed bin Salman had told him that Pakistan and Prime Minister Imran Khan held special place for the kingdom, so he (Crown Prince) was pleased to do this. “The Saudi finance minister also telephoned me on Tuesday and informed about the support,” the adviser said, adding some of the amount had already been released on Tuesday. He informed that the rate of interest on the loan would be 3.2 per cent.

Talking about the inflation, Tarin said oil prices in Pakistan were the lowest as compared to other countries, including regional ones, except the oil producing countries. He said keeping in view the purchasing power parity Pakistan was one of the cheapest countries in the world. “Although income is low, the prices of commodities are also low as compared to other counties of the world.”

Tarin categorically denied having any link between the Saudi Arabia’s extended facility and International Monetary Fund (IMF) programme. He said talks with IMF were nearing successful completion and within couple of days the programme would be finalised. He said the agreement had already been made before he flew from Washington. The adviser said with the $4.2 billion Saudi facility and upcoming agreement with the IMF, there would be positive impact on market so there should be no uncertainty.

Speaking on the occasion, Energy Minister Azhar said inflation was a global phenomenon as the whole world was passing through commodity cycle. He also said oil prices in Pakistan were low, except the oil producing countries, whereas the gas prices were not increased since 2019, which had gone up by five to 10-fold in European countries.

He expected that the world commodity cycle would break within around six months and the prices in the world market would come down leaving positive impact on inflation in Pakistan.

On Financial Action Task Force (FATF), he said Pakistan had made tremendous progress on two simultaneous plans, adding the country had completed 26 out of 27 action points of earlier plan and majority of the FATF members had expressed satisfaction over the progress made over the remaining one point.

Likewise, out of seven points of FATF’s June plan four have been completed, which he said was history in FATF to have completed 50 per cent of action plan in first review.