Pakistan asked Saudi Arabia on Wednesday for an immediate $3 billion cash infusion after its foreign exchange reserves reached an extremely low level. The country’s new army chief was also anticipated to play a role in securing the bailout during his upcoming first visit to the Kingdom.
According to representatives of his ministry, Finance Minister Ishaq Dar requested it during a meeting with the Saudi Ambassador, Nawaf bin Said Al-Malki.
It was the second day in a row that the finance minister met with diplomats from other countries in an effort to secure their financial assistance and persuade the International Monetary Fund (IMF) to relax its restrictions on releasing the $1.2 billion tranche to the nation.
Dar requested a $3 billion cash bailout in addition to rolling over the previous debt by the same amount.
Nevertheless, there is a pressing need for action because the nation’s foreign exchange reserves have dropped below $7 billion for the first time since January 2019.
Approximately $6.7 billion in reserves are available at the moment, which is nearly the same amount as on January 18, 2019.
According to the sources, the $6.7 billion reserves are insufficient to cover the $8.8 billion in principal and interest payments due between January and March of the current fiscal year.
According to a news release from the finance ministry, Dar thanked the ambassador for extending the term of a $3 billion deposit by the Saudi Fund for Development (SFD) in the State Bank of Pakistan (SBP).
According to the finance minister, Pakistan received “assurances of a $13 billion financial package from China and Saudi Arabia, including $5.7 billion in new loans,” in the first week of November.
Saudi Arabia contributed $4.2 billion of them, and China contributed $8.8 billion.
However, during the previous month, no progress could be made; instead, the nation paid back two Chinese commercial loans totaling $1.2 billion.
The $13 billion package covers 38% of the nation’s projected gross external financing needs for the fiscal year 2022–2023.
In spite of imposing numerous strict conditions, the IMF has not produced a significant financial package, so its realisation can eliminate the risk of default.
According to the sources, it was also discussed at the meeting that General Syed Asim Munir, the new Chief of Army Staff (COAS), would soon travel to the Kingdom.
After the meeting, it was revealed that the military leadership would also discuss the cash injection issue.