ISLAMABAD: The $3.2 billion deferred oil payment facility extended by Saudi Arabia to Pakistan on 23 October 2018, valid up to three years, was utilized to the extent of Rs 138.8 billion or around 0.8 billion dollars (at 167 rupee to the dollar) in 2019-20 even though the budgeted amount was Rs 480 billion.
When Business Recorder asked a senior official of the Ministry of Finance as to why the facility was not fully utilized as budgeted the response was "low demand and prices were the reason behind low utilization of the facility." He, however, did not respond to the query about any reduction in the oil facility.
Demand for oil and products declined by 27.8 percent due to Covid-19 while motor fuel price as per Pakistan Bureau of Statistics (PBS) declined by 9.79 percent and liquefied hydrocarbons year on year by 3.65 percent; however, PBS data reveals that Pakistan's imports under petroleum group in 2019-20 were of $ 10.42 billion and included $4.74 billion petroleum products, $ 2.722 petroleum crude, $2.66 billion natural gas liquefied and $294 billion petroleum gas liquefied.
The government has budgeted Rs165 billion under the oil facility for 2020-21 which may partly reflect low growth though the Ministry of Finance has budgeted a growth rate of 2.1 percent against the more realistic projection by the International Monetary Fund of 1 percent and World Bank's projection of negative 0.2 percent. There are reports circulating in the federal capital that Saudi Arabia has asked for $1billion out of the $3 billion it released in 2018 in support for the Pakistan's balance of payment problems during the visit of Prime Minister Imran Khan to Riyadh; and that China has bridged the shortfall which would imply that the ongoing 6 billion dollar thirtynine-month IMF's Extended Fund Facility (EFF) programme may continue as the friendly countries - China, Saudi Arabia and UAE - had pledged roll over of their assistance till the end of the EFF to the Fund management. The EFF was scheduled for completion in September 2022 but with Covid-19 is expected to go on till early 2023.
Secretary Finance Naveed Kamran Baloch when asked about the reported repayment of $1 billion to Saudi Arabia promptly replied "no comments" while spokesman for State Bank of Pakistan (SBP) expressed his ignorance about the matter.
Another official, without commenting on whether Saudi Arabia has recalled US$1 billion, stated that the Saudis had been very helpful to Pakistan by not laying off Pakistani workers due to the pandemic and paid three months' salary to Pakistani workers from the kingdom's exchequer. Business Recorder sought comments from IMF resident representative Teresa Daban Sanchez however no reply was received till the filing of this report.
Copyright Business Recorder, 2020
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