Tarin explains Saudi package, IMF talks

ISLAMABAD: There was no link of US $ 4.2 billion Saudi package for Pakistan with the ongoing negotiation with the International Monetary Fund (IMF) on 6th review for revival of the Extended Fund Facility (EFF).

This was stated by Advisor on Finance Shaukat Tarin, while addressing a press conference along with Minister for Energy Hammad Azhar on Wednesday.

The adviser on finance said that he was informed by Saudi finance minister on Tuesday that funds are being released for Pakistan.

He added that he was trying to provide relief to the people even in the face of rising global prices of oil products and this was done by lowering petroleum levy but stated that petroleum prices in Pakistan are still lower compared to other countries.

The Adviser on Finance said an agreement has been reached with Saudi Arabia on $1.2 billion oil facility on deferred payment for a period of one year and $3 billion deposit in the State Bank of Pakistan (SBP) during Prime Minister Imran Khan’s visit to Saudi Arabia and a meeting with Saudi Crown Prince Muhammad bin Salman.

Pakistan will get US$ 4.2 billion from Saudi Arabia for a period of one year and there is no change in the terms and conditions of oil facility on deferred payment as the same interest rate of 3.2 percent would be charged.

Replying to questions, he said that the discussion with a positive outcome would be completed in a day or two with the IMF on 6th review of the EFF as almost all things have been finalised except one issue.

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“We have come close to an agreement with the IMF and everything will be fine in a day or two, Tarin said and added that there was no issue of revenue and fund management of primary deficit was required and on top of that the IMF was told that revenue collection was Rs 175 billion more than the target during the first quarter of the current fiscal year, which would help offset some shortfall in collection of petroleum levy that has been cut to provide relief to the people against rise of petroleum prices in the global market.

“The IMF wanted that the primary deficit should be kept in balance. We told them that during the first three months of the current financial year, the revenue has gone up,” the adviser on finance added.

The Minister for Energy said that petroleum and gas prices in Pakistan are relatively less compared to the rest of world.

He said that during the outbreak of coronavirus, the world’s major economies had given stimulus packages for recovery, adding that shutdown of industry led to demand-supply gap and consequently, cost of everything, including food prices have doubled to tripled.

Prices of everything including oil, coal, and wheat rose in the global market.

He further stated that there was increase in prices from the US to Bangladesh and from China to Ethiopia, adding that the prices of petroleum products in Pakistan are lower than in many other countries, while gas prices have not been increased since 2019.

Azhar said that they are trying to reduce the price of urea fertilizer and now a bag of urea is available at Rs1,700 to Rs1,800 against Rs7,000 in the international market.

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The government has provided Rs450 billion relief in taxes, which was increasing pressure on the fiscal side. The government also required fund for other expenditure, such as public sector development programs, defence, and others.

The government has so far tried its level best to keep prices low and expressed the hope that over the next six months, global food and oil prices may decrease, which will have a positive impact on Pakistan as well.

To a question about the FATF, he said that progress was acknowledged on 26 out of 27 points and the majority of countries agreed that Pakistan has complied with the last point but some countries wanted more progress on this one point.

He said that in June 2021, Pakistan was given a seven-point action plan on money laundering and the country made progress on four out of seven items in one go during the last three months.

Copyright Business Recorder, 2021