Daily Times

The finance ministry is busy giving itself a pat on the back for getting the Saudis to agree on another special oil facility for Pakistan, details of which will be announced in a few days, but given past experience and ground reality the government should be careful about premature celebrations lest it counts its eggs before they hatch. The PTI (Pakistan Tehreek e Insaf) government counted getting its first such facility from Riyadh in 2018 as one of its biggest achievements not long after it took power, but that didn’t play out as expected. That facility also came with a grant whereby a billion dollars of Saudi money was parked in the SBP’s (State Bank of Pakistan’s) vaults to make our reserves look pretty, but that too ran into trouble and we had to borrow from the Chinese, at a much higher interest rate, to pay back the Saudis.

Granted, times have changed and both Riyadh and Islamabad face fresh challenges that have made the former realise, especially, that it will need the goodwill of as many friends as possible to face the turbulence caused by the pandemic and fluctuating oil prices in the international market; not to mention a very pronounced slowdown in relations with Washington. And since we could do with as much cheap oil as possible given our current account difficulties, the shoe seems to fit perfectly this time. Details of the new deal are anxiously awaited but even if it gives us a window for a couple of years, just when brent Crude is on the rise and seems likely to stay that way for a while to come, it could go some way in enabling the kind of takeoff that the finance ministry is priming for.

Pakistan desperately needs a cushion against the bloating import bill, which already threatens to derail the expansionary budget for the ongoing fiscal year. And there’s no better way of controlling such expenditures than sanitising the oil bill, which is also responsible for pushing up prices across the board whenever it rises, because fuel is the essential input in all sorts of economic activity. But, welcome as this development is, it is not the solution to our problems. These are stopgap measures and should be resorted to very sparingly because, at the end of the day, they take away more power than they give the government. *