With a high-level Saudi delegation due to arrive on Sunday, Pakistan may seek oil facility on deferred payment in an effort to deal with the balance of payment problem in addition to investment in infrastructure projects under China Pakistan Economic Corridor (CPEC).
An official in the Finance Ministry on condition of anonymity said the country is facing serious problems on external account due to a widening trade deficit and the government is striving to reduce the import bill.
He added that oil imports accounted for $14.5 billion out of a total import bill of 60.89 billion dollars last fiscal year, around 24 percent, and a deferred payment facility could help reduce the import bill significantly. This will in turn help the government to deal with rapidly widening current account deficit.
Saudi Arabia provided free oil facility to Pakistan in 1998 after the US imposed sanctions in the aftermath of the nuclear tests. This facility was withdrawn after Shaukat Aziz, the then prime Minister, publicly declared that Pakistan had reached the economic take-off stage.
Saudi Arabia also provided $100 million credit facility to Pakistan in 2012 for import of Urea from the Kingdom. An agreement to this effect was signed between Trading Corporation of Pakistan (TCP) with the Saudi Arabia Basic Industries Corporation (SABIC) for supply of approximately 200,000 tons of urea to Pakistan under Saudi Fund for Development.
In 2014, the then Finance Minister Ishaq Dar revealed that a 'gift' of $1.5 billion was made by a 'friendly country' and later it was made public that that gift was provided by Saudi Arabia.
There are also reports that Saudi-backed Islamic Development Bank (IDB) may provide $4 billion to Pakistan to replenish its depleting foreign exchange reserves.
On Thursday, Minister for Information and Broadcasting Fawad Chaudhry stated that the high-level Saudi delegation is arriving as follow up on Pakistan's invitation to invest in CPEC as well as in other infrastructure projects in the country.
He said that the delegation will consist of Saudi investment head, minister for petroleum and minister for energy, adding that during Prime Minister Imran Khan's recent visit to Saudi Arabia, the Kingdom had expressed an interest in investing in CPEC projects especially in the special economic zones as well as setting up an oil refinery in Gwadar Port.
Chaudhary also revealed that Pakistan has already signed three grant agreements, though he made no mention of the amount or the purpose for which the grants were to be used, describing it as a positive step which will further strengthen the relations between the two countries.