Pakistan, facing economic crisis, has now sought long-term financial aid from Saudi Arabia.

Islamabad: Poor Pakistan, grappling with economic challenges, has sought long-term financial assistance from Saudi Arabia. According to a media report on Monday, Islamabad has requested several financial assistance from Riyadh, including a proposal to convert the existing short-term deposit of $5 billion into a 10-year long-term facility.

According to the report, Pakistan has also requested an increase in the deferred payment oil facility from Saudi Arabia from $1.2 billion to $5 billion and an extension of its term. Pakistan has also proposed securitizing approximately $10 billion in remittances from expatriate citizens. According to the report, top government sources said that Pakistan’s economic problems have been exacerbated by geopolitical tensions stemming from the ongoing US-Israeli war against Iran.

Pakistan is also in talks with
the International Monetary Fund (IMF) to complete the third review of its $7 billion Extended Fund Facility (EFF) program. Pakistan and Saudi Arabia were already discussing a comprehensive economic assistance package, but recent global tensions have accelerated these talks.

According to the report, Pakistan has requested the conversion of $5 billion of Saudi funds deposited with the State Bank of Pakistan into a long-term loan. Under this proposal, existing short-term deposits could be converted into a 10-year loan facility at favorable rates. Another proposal calls for an increase in the oil facility provided on a deferred payment basis. The current $1.2 billion arrangement would be increased to $5 billion and the repayment period would be extended from one year to three years.

Plans to raise expatriate remittances and international funds:
Under the third proposal, Pakistan has proposed securitizing remittances sent by expatriate citizens. This could help increase foreign exchange reserves and reduce dependence on expensive foreign debt. The fourth proposal asks Saudi Arabia to consider providing guarantees for Pakistan’s efforts to issue international sukuk (Islamic bonds), which could help Pakistan raise capital from international markets at lower interest rates.

Trade and Investment Proposals
Pakistan has also requested Saudi Arabia to provide an EXIM credit line. Islamabad has also appealed to Saudi Arabia to consider waiving the requirement of bank guarantees for import-related transactions. The report said that Pakistan has also requested Saudi Arabia’s Public Investment Fund (PIF) to explore potential investment opportunities in the country. It also sought support for tax reforms and possible adjustments to primary surplus targets in line with the IMF program.

According to a report, Saudi Arabia’s response to these eight key requests from Pakistan is not yet clear. The newspaper reported that it had also contacted Pakistan’s Ministry of Finance and the State Bank of Pakistan in this regard, but received no official response.