Saudi Arabia extends $300m grant to Pakistan
Tuesday, March 11, 2008
By Khalid Mustafa
ISLAMABAD: In a bid to bail out Islamabad from ongoing economic morass that has arisen in the wake of rising oil prices in the international market, Saudi Arabia has extended one time grant of $300 million in cash as a budgetary support to Pakistan, caretaker Finance Minister Dr Salman Shah told The News.
"The government has been experiencing the pressure on balance of payment since long mainly because of the continued escalating oil prices in the international market that touched $107 per barrel owing to which the budget deficit is likely to increase by 5 to 6 per cent of GDP against the 4 per cent fixed in the budget for 2007-08."
This monetary help from Saudi Government will not only reduce the pressure on balance of payment, but also help trim down the increasing budget deficit. Shah further explained that this grant is not for the years to come as it is for ongoing fiscal year in which the government is facing a lot of economic problems mainly because of the steep rise in oil prices in the global market.
To a question, Dr Shah said if the oil prices in the world market keeps on surging, the newly elected government, to be installed within days, can pursue the Saudi government for more such grants.
However, a press release issued by the Finance Ministry later said in a good well gesture of support for the people of Pakistan, the brotherly government of Saudi Arabia has given a budgetary support of $ 300 million to Pakistan. It says: "The grant will help bridge the fiscal gap in Pakistan that arose due to high global prices of oil and petroleum products."
"The Saudi action has come after President General Musharraf's recent visit to Saudi Arabia during which he requested his highness King Abdullah to help Pakistan in defraying the cost of high oil prices.
"The decision of the Saudi Government is very timely and will help Pakistan in meeting the budgetary gaps effectively and promoting macroeconomic stability in the country," the press release concluded.
Saudi Arabia extends $300m grant to Pakistan