The government of Pakistan recently informed the International Monetary Fund (IMF) that its Saudi oil facility is a grant, and not a loan.
The $1 billion facility was granted as a friendly gesture by Saudi Arabia in 1998 to help stabilize that shaky balance of payments of Pakistan, reports The Islamabad News. The move aided the country maneuver through a difficult economic period.
Pakistan’s budget deficit, without taking into account the Saudi grant, stands at 4.9 percent for the 2001/2002 fiscal year, and at 5.4 percent for the 2000/2001 fiscal year. Once the Saudi grant is accounted for, however, the Pakistani budget deficit stands at only 3.6 percent for the current fiscal year.
Pakistan’s current daily oil production stands a mere 55,000 to 65,000 barrels per day. In light of the establishment of new thermal generation plants, which increased its need for oil, the country must import large quantities from abroad.
Thus, the Saudi oil plant has helped keep Pakistani oil prices stable, despite worldwide fluctuations.
Furthermore, Pakistan is expected to begin negotiations with the IMF for a medium-term financing package to help offset its massive public debt. Currently, this debt nearly matches the nation’s gross domestic product (GDP).
Pakistan requires an estimated $5 billion annually in financial aid. –(MENA Report)
© 2001 Mena Report (www.menareport.com)
