Daily Times

With the IMF bailout program pretty much in the bag and the $2.3 billion loan from the Chinese successfully rolled over, the government’s next stop is clearly the Kingdom of Saudi Arabia (KSA). Islamabad is counting on Riyadh to enhance its oil facility on deferred payments, which the previous PTI administration negotiated, from the current $1.2b to$3.6b.

That way we would be able to get $300m worth of oil every month; up from the current level of $100m. Some extra groundwork seems to have gone into this particular project as well since, not unlike in the past, army chief General Bajwa has also paid a very successful visit to the Kingdom, where he was honoured with the prestigious King Abdul Aziz medal.

To give credit where it is due, the government does seem to have shifted gears rather quickly, although only after delaying important decisions initially. For the first month, it was the very picture of political paralysis as it weighed burning political capital for necessary economic reforms against opting for an immediate election. Since then, it’s signed off on all the traumatic ‘prior conditions’ mandated by the Fund, and gone back to our time-tested lenders of last resort to renegotiate initiatives that the previous government also tried but was turned down.

That happened because PTI violated a signed agreement with the IMF when it announced the petrol and electricity subsidy right before being dismissed through a no-confidence vote; and the Saudi arrangement, at least, was contingent upon the continuation and completion of the Extended Fund Facility (EFF). And when one went, the other did too. It’s still very important to note that even with the Saudi and Chinese help things will become only slightly better.

The country must pay off close to $40b in debt over the next fiscal, and the whole drama about the IMF program was about a $6b facility at the end of the day, so we will definitely need a lot more friendly money coming our way over the coming months and quarters to get clear off the hook. We are not nearly out of the woods, but this is the closest to the right way out. *