Saudi Arabia has assured Pakistan of economic help, Pakistan's top economic official said on Wednesday, but he gave no details of any specific assistance. Pakistan is facing a balance-of-payments crisis that analysts say has left the nuclear-armed US ally little option but to accept International Monetary Fund (IMF) help.
But Pakistan is hoping to avoid an IMF programme, which entails painful conditions, by securing help from allies and other multilateral lenders. President Asif Ali Zardari travelled to Saudi Arabia on Tuesday in the hope of securing help.
Before his departure, Zardari said he would ask Saudi Arabia to defer payments for crude oil. Pakistan's annual oil bill had risen to $12 billion from $3 billion in five years, he said.
The prime minister's top economic adviser Shaukat Tarin, who is with Zardari in Saudi Arabia, told Pakistani state television Saudi King Abdullah bin Abdul-Aziz had assured Zardari of help and had responded "positively" to the request on oil payments. "Everything was put on the table by Mr President and their attitude was positive towards everything," Tarin said by telephone from Riyadh.
"Now details have to be finalised but this should be taken as they have an intention to help Pakistan economically," he said. Saudi Arabia has deferred Pakistani oil payments before but diplomats say donors, including Saudi Arabia, want to see the government reach an agreement with the IMF before offering their own support.
Pakistan imports about 82 percent of its crude oil from Saudi Arabia. Analysts say deferred payments on a third of that, as requested, would provide Pakistan with relief of up to $1.8 billion a year on its balance of payments, at current oil prices.
"BEST INTERESTS": Tarin said Pakistan would decide in the next few days if it would go to the IMF for a loan. "We'll analyse all the options in the next few days and whatever is in our best interests we'll adopt," he said. Pakistan's economic woes began before the global financial crisis set in, but analysts say the crisis has compounded Pakistan's difficulties by making donors, trying to shield their own economies from the financial storm, reluctant to step in.
While holding out for bilateral help, Pakistani officials have also held days of negotiations with the IMF in Dubai. Pakistan needs urgent help. Its foreign reserves dwindled to $6.92 billion on October 25, out of which the central bank accounted for $3.71 billion, not enough to cover September's imports worth $3.807 billion.
Zardari said earlier he would also seek Saudi support for the Friends of Pakistan group, which is due to meet in Abu Dhabi on November 17. The group was set up in September on the sidelines of the UN General Assembly in New York by countries that want to help Pakistan, whose support is seen as vital in defeating al Qaeda and bringing stability to neighbouring Afghanistan.
Analysts say Saudi Arabia has no interest in seeing Pakistan descend into chaos, not least because that would strengthen al Qaeda which has set its sights on the kingdom's rulers. Saudi Arabia also sees Sunni Muslim-majority Pakistan as a counterweight to Shi'ite Iran, analysts say.