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Saudi Arabia agrees to restart oil aid for Pakistan: Financial Times

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June 21, 2021 (MLN): Saudi Arabia has agreed to resume oil assistance to Pakistan worth at least $1.5bn annually in July, Financial Times (FT) reported on Monday.

This oil facility would help ease the external account position of the country.

Last month, Federal Minister for Information and Broadcasting Fawad Chaudry stated that the Kingdom of Saudi Arabia had agreed, in principle to help Pakistan by resuming the Saudi Oil Facility (SOF) on deferred payments, costing up to $3 billion per annum for an extended period.

To recall, in 2018, KSA had provided a $6 billion financial package, including $3 billion deposits into the State Bank of Pakistan, and the remaining $3 billion for oil facility on deferred payment per annum basis.

However, the Kingdom has put the oil facility on hold since May 2020 and demanded Pakistan to repay a $3 billion loan, when Islamabad pressured Saudi Arabia to criticize India’s nullification of Kashmir’s special status.

Nonetheless, the predicament between the two long-standing allies has eased, after Prime Minister Imran Khan met Crown Prince of Saudi Arabia Mohammed Bin Salman in May’21.

According to Financial Times, the Saudi offer is less than half of the previous oil facility of $3.4bn, which was put on hold when ties frayed.

But Fahad Rauf, head of equity research at Ismail Iqbal Securities in Karachi, said: “Any amount of dollars helps because of time and again we face a current account crisis. And with these prices north of $70 a barrel anything helps.” FT cited.

The timing of the Saudi gesture is interesting given that Iran is preparing to step up its own oil exports with the US considering easing sanctions, it added.

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Posted on: 2021-06-21T15:10:00+05:00

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