Daily Times

According to Pakistan’s finance minister, Ishaq Dar, China and Saudi Arabia have agreed to give Pakistan a financial package worth $13 billion.

The finance minister revealed during a casual conversation with journalists that China will give Pakistan $8.8 billion in financial support during the current fiscal year apart from rolling over its loans, which includes $3.3 billion in loans from Chinese commercial banks and $1.45 billion in additional financing.

Dar stated that there was a possibility of receiving an additional $4.2 billion in financial aid from Saudi Arabia, which would include a $3 billion package addition and the supply of Saudi oil with a deferred payment.

Saudi Arabia will also build a $10-12bn petrochemical refining project at Gwadar, the finance minister said adding that the leadership in China and KSA assured Prime Minister Shehbaz Sharif of their cooperation.

Apart from this, Pakistan was also engaging the KSA in privatization transactions like in LNG power projects and shares in other entities to ensure non-debt creating foreign inflows.

Dar said there was an understanding that both countries would take care of the financial needs of Pakistan till June 2023.

The minister said that China agreed to accelerate speed of work on the construction of ML-1 and the Karachi Circular Railway.

Pakistan is struggling with low foreign exchange reserves, bad credit rating by the international financial agencies and the devaluation of its currency.

During his talk, the minister insisted that the rupee’s real effective exchange rate (REER) was around Rs194 per dollar, even lower than Rs200. He hoped that the stakeholders would keep in mind the national interest instead of indulging in profitmaking.

Although the finance minister said he supported a market-based exchange rate, he added that a small group of speculators could not be permitted to hold the rupee hostage. He claimed that in addition to reducing inflation, the rupee’s rise will also assist.

Ishaq Dar claimed the government had decided not to approach the Paris Club for rescheduling of debt.