Saudis may provide multi-billion dollar aid package

[Neo]

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Saudis may provide multi-billion dollar aid package

By Sher Baz Khan
Monday, 09 Mar, 2009

ISLAMABAD: Saudi Arabia is expected to announce a multi-billion dollar aid package for Pakistan in the form of oil and fertiliser on deferred payment and securitisation against workers’ remittances during the March 27 meeting of the foreign ministers of the ‘Friends of Pakistan’ group in Tokyo, informed sources told Dawn.

The Advisor to the Prime Minister on Finance, Shaukat Tarin, returned here on Monday from his two-day official visit to the kingdom.

His visit marked the start of government’s bid to lobby for getting financial assistance from friendly states as Pakistan’s macro economic indicators are witnessing a recovery and the International Monitory Fund (IMF) has already started providing its 23-month-long $7.6billion financial package to the country.

Mr Tarin held a meeting with the Saudi Minister for Finance, Dr Ibrahim bin Abdul Aziz Al Assaf in Riyadh.

According to a Finance Ministry press release issued here, both the officials discussed issues relating to Pakistan's economic reforms and development, pace of economic stability in the country and the role of the Saudi Development Fund in support of development projects in Pakistan.

They exchanged views on existing turmoil in international capital markets and global economic recession and discussed ways and means for strengthening the regional economies of South Asian states with special emphasis on Muslim countries. It was held that in order to obtain sizeable and cost effective financing within the economic cooperation framework of Muslim countries, global investors could be invited to attractive investments in secured economic instruments.

Matters relating to provision of crude oil from Saudi Arabia were bilaterally discussed.

Mr Tarin, during his discussions with his Saudi counterpart covered various subjects like securitisation of workers’ remittances, alleviation of poverty and enhancing the volume of trade, especially the export of agricultural products to Saudi Arabia. Both sides also discussed the Kingdom’s support for the supply of oil, promotion of investment and enlisting Pakistani firms in construction of mega projects in Saudi Arabia.

The advisor during his stay in the Kingdom also met the head of the IDB Dr Ahmed Ali in Jeddah. Both officials held mutually beneficial discussions to foster closer cooperation between the banking sectors of the two countries. It was agreed that financial institutions of the Muslim countries may harmonise their efforts to build stronger economies of Muslim states in South West Asian Region.

Mr Tarin’s meeting with his Saudi counterpart in Riyadh was attended by the Governor of Saudi Arabia Monetary Agency (SAMA) and Pakistan’s Acting Ambassador to Saudi Arabia.

Sources in the Finance Ministry say Japan believed the IMF package for Pakistan was not enough and that it was ready to help the country and to also show solidarity with the new US President Barack Obama who wanted to shift his focus proactively on Afghanistan and Pakistan.

US Secretary of State Hilary Clinton is also expected to attend the Tokyo meeting of the group. Britain, France, Germany, the United States, China, the United Arab Emirates, Canada, Turkey, Australia and Italy plus the United Nations and the European Union are the members of the Friends of Pakistan.

Pakistan has already invited Japan to set exclusive economic zones in Karachi and Gwadar and also develop the country’s agriculture, manufacturing and energy sectors.

Pakistan is not expecting any immediate direct monetary help from Japan, but intends to present a list of projects which shall be financed by Tokyo. Japan may also assist Pakistan in meeting its strategic needs such as development of water resources, roads and railways.

When the Pakistan Peoples Party (PPP) came into government last year, it had made a plan of obtaining $60billion financing for 71 development projects from the Friends of Pakistan to stabalise the country’s sinking economy. But, it had been termed as a ‘wish list’ by some partner countries at that time. Now, a year down the road and after improving its macro economic indicators, Pakistan is well placed to shake up its friends to contribute in various forms before the announcement of the new budget in June.

[metalfalcon]

Under current situation it is very difficult for Pakistan to convince anybody to finance anything in Pakistan and attract Foreign Investment.

I hope Political Turmoil will end soon so that Govt can Focus more on Development of Pakistan rather then focusing on Sharif Brothers.

PPP should think about Pakistan rather than Thinking about Forming Govt in Punjab.

[roadrunner]

Why didn't Saudi give this funding before Pakistan took out the IMF loan?

[Energon]

Why didn't Saudi give this funding before Pakistan took out the IMF loan?

The IMF loan consisted of capital that was to be used to offset remittances on outstanding debt; Saudi's assistance package primarily consists of goods on deferred payments. While one cannot substitute for the other, it would have certainly been beneficial for this grant to have come through earlier. However you must remember that the global economic recession has each nation looking out for themselves first and foremost, and Saudi's economy itself was at jeopardy with tumbling oil prices towards the end of the year. They probably wanted to wait and see what happens before giving out aid packages.

[ajpirzada]

Why didn't Saudi give this funding before Pakistan took out the IMF loan?

saudis were willing to provide oil on deferred payment even before but the price they were askin for was high. we didnt go for it after seeing oil prices comin down. now they ll be settin a new price which will probably be lower than before as global economy is expected to hit recession

[Contrarian]

IIRC they have instead gotten some kind of compensation. I dont recall correctly this aspect, but i think it was related to foods or vegetables. They got some land, the produce would go directly to Saudi Arabia or something like that. Its been posted in this forum itself somewhere.

[nwmalik]

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have we actually ever made these so called defered payments in the past?
how should we expect friends like KSA to keep filling leaking buckets of pakistan economy?