Purchase of urea on deferred payment: Saudi Arabia refuses $400 million credit facility

Saudi Arabia has refused to provide $400 million additional credit facility to Pakistan for the purchase of urea on deferred payment, well-placed sources told Business Recorder here on Sunday. According to sources, at present the country is facing Urea shortage.
At the very beginning of wheat sowing season, the prices of Urea have gone up due to black-marketing and smuggling of the commodity. Keeping this thing in view, the government had directed the Economic Affairs Division (EAD) to make a deal with Saudi Arabian government but it was turned down, sources revealed.
The Saudi Arabia agreed in September 2008 to provide a credit facility of $258 million to Pakistan on deferred payment. But the increasing demand of Urea in domestic market once again forced the government to ask for an additional credit facility worth $400 million.
Sources said that the reluctance of Saudi Arabia to provide additional credit facility of $400 million and its earlier negative response to provide financial assistance to Pakistan to overcome its balance of payment crisis before going to IMF clearly indicate that the Saudis no more trust our present government.
An official of the Food Ministry, requesting anonymity told Business Recorder that most of the countries of the world are suffering from financial crunch and Saudi Arabia is no exception to it. That is why, Pakistan''s request for additional credit facility was turned down. Federal Minister for Food, Agriculture and Livestock (Minfal), Nazar Muhammad Gondal, while defending the refusal of Saudi Arabia in this regard said: "After getting loan from International Monetary Fund (IMF), there is no need of additional credit facility from Saudi Arabia. So, the government has, therefore, withdrawn its own proposal".
The minister noted that government would float another tender of 350,000 tons import on January 15 to ensure the availability of the fertiliser to farmers. The government would also offload 290,000 tons Urea fertilizer in the market by December 31 to break the cartel of the market players.
IMF has approved a 23-month stand-by arrangement for Pakistan equivalent to SDRs5.169 billion (about 7.6 million dollars) to support the country''s economic stabilisation programme. Considering the current ongoing global financial market crisis, Pakistan has already succeeded in securing third place in terms of amount of loan accessed from IMF.
Sources disclosed that the government has started importing Urea fertiliser from other sources after getting loan from IMF. They said that the government would import 390,000 tons Urea by January 15 and 190,000 tons Urea would reach Pakistan by December 31.