Daily Times

The government has asked Saudi Arabia to provide a $1 billion oil facility on deferred payment for the calendar year 2024. Pakistan is about to start review talks with the International Monetary Fund (IMF).

“Pakistan has made a formal request for $1 billion Saudi Oil Facility (SOF) on deferred payment with effect from January 2024. The KSA has not yet given its confirmation, and its exact modalities will be worked out within the next couple of months, including attached cost and other terms and conditions,” sources told the publication.

The facility is a component of the financing strategy that the Pakistani government and IMF came up with as part of the $3 billion Standby Arrangement (SBA).

December of this year marks the facility’s final day of operation.

The final three months (July-September) of the current fiscal year have seen Islamabad receive $300 million so far.

It was anticipated that another $300 million would be disbursed by the end of December 2023 under the current SOF, which KSA had already used to disburse a total of $700 million between March and September 2023.

The Islamic Development Bank’s (IsDB) pledge of $3.3 billion under the ITFC mechanism, according to another official who spoke on the condition of anonymity, was not as good as expected. The bank agreed to pledge $1 billion for the duration of the current fiscal year as part of the pledge.

However, the bank has now said that it might reduce the amount of syndicated loan facilities for the current fiscal year from $1 billion to roughly $250-500 million. At its upcoming board meeting in December 2023, the IsDB is anticipated to give its final approval.

The IsDB team discussed the decision with Pakistani authorities and cited a number of factors, including the difficulty in obtaining dollar loans from international financial institutions due to high-interest rates around the world.