PM Shehbaz Sharif touches down in Saudi Arabia on three-day visit

• Prime Minister Shehbaz Sharif starts maiden three-day visit to Saudi Arabia.
• Pakistan to request KSA to increase deposits by $2 billion: sources.
• Bilawal Bhutto, Khawaja Asif, Miftah Ismail, other officials accompanying PM.

ISLAMABAD: Prime Minister Shehbaz Sharif Thursday arrived in Saudi Arabia — for his three-day visit — at the invitation of Saudi Crown Prince Mohammad bin Salman bin Abdulaziz.

Foreign Minister Bilawal Bhutto-Zardari, Defence Minister Khawaja Asif, Finance Minister Miftah Ismail, Information Minister Marriyum Aurangzeb, Shahzain Bugti, Mohsin Dawar, Khalid Maqbool Siddiqi, Chaudhry Salik, and four members of PM Shehbaz Sharif's personal staff are accompanying the prime minister on his visit.

Governor Madinah Faisal bin Salman Al Saud and high-level Saudi officials received the prime minister after he touched down in the kingdom.

The prime minister held a brief meeting with Madinah's governor, where both the leaders exchanged views on bilateral relations.

Taking to Twitter before leaving for Saudi Arabia, PM Shehbaz said that his visit will "renew and reaffirm" ties between the two countries. He added that he will hold wide-ranging discussions with the Saudi leadership.

Briefing on the visit, Foreign Office spokesperson Asim Iftikhar, in a statement, had said that the prime minister will be in the kingdom from April 28-30.

During the visit, the prime minister will have bilateral interaction with the Saudi leadership, with a particular focus on advancing economic, trade and investment ties, and creating greater opportunities for the Pakistani workforce in Saudi Arabia, the spokesperson said.

"The two sides will also exchange views on a range of regional and international issues of mutual interest," the spokesperson said.

Iftikhar said Pakistan and KSA are bound by fraternal relationships marked by mutual trust and understanding, close cooperation, and an abiding tradition of supporting each other.

The people of Pakistan hold the custodian of the Two Holy Mosques in the highest esteem, the spokesperson added.

"The bilateral relationship is complemented by close mutual collaboration at regional and international fora. Saudi Arabia is a member of the OIC Contact Group on Jammu and Kashmir," he said.

Iftikhar said Saudi Arabia is home to more than two million Pakistanis, contributing to the progress, prosperity and economic development of the two brotherly countries.

The spokesperson further noted that regular high-level visits are a key feature of this special relationship.

Iftikhar added that the prime minister's visit to Saudi Arabia would impart a strong impetus to deepening bilateral cooperation in diverse fields and further reinforce the growing partnership between the two countries.

Pakistan to ask for additional $3.2b from Saudi Arabia 

Pakistan has decided to seek an additional package of $3.2 billion from Saudi Arabia to jack up the total facility to $7.4 billion from the existing $4.2 billion during the current visit of Prime Minister Shehbaz Sharif, in order to avert further depletion of foreign currency reserves.

Top official sources confirmed while talking to The News on Wednesday: “We are going to request the Kingdom of Saudi Arabia to increase the amount of the deposit from $3 billion to $5 billion and double the Saudi Oil Facility (SOF) from $1.2 billion to $2.4 billion, so the total package could be increased up to $7.4 billion during the visit of premier Shehbaz Sharif.” 

When one of the top officials of the Finance Division was contacted and inquired about the proposed package from Saudi Arabia, he replied: “We are requesting for deferred payment facility and enhancing the credit extended for forex support." 

However, the top official showed reluctance to share further information about the exact details to be requested by PM Shehbaz Sharif before the KSA authorities, especially in his meeting with Saudi Crown Prince Mohammad Bin Salman and other top dignitaries.

Pakistan will also make a request to the Kingdom of Saudi Arabia for rollover of the existing package of $4.2 billion for one year till June 2023 in order to align it with the IMF programme as Islamabad has already asked the Fund to extend the existing Extended Fund Facility (EFF) for nine months till June 2023 coupled with increasing the size of the programme from $6 billion to $8 billion.

Saudi Arabia had already given $3 billion deposits to the State Bank of Pakistan and an oil facility on deferred payment worth $1.2 billion during the tenure of the last PTI-led regime. The deposits were given in December 2021, while the Saudi Oil Facility (SOF) started in March 2022 and so far, $100 million have been disbursed.

Saudi Arabia had placed stringent conditions on the last package amount of $4.2 billion and linked it to the IMF programme.

The IMF programme is expected to be revived by end of June 2022 if all things are settled, as Islamabad requires a breathing space for three months period.

According to the estimates calculated by Dr Hafiz A Pasha, Pakistan requires a $12 billion injection in order to avert the balance of payment crisis and further depletion of the foreign currency reserves. Pakistan will have to seek a rollover of $4.3 billion from China, including $2.3 billion in commercial loans and the remaining $2 billion in deposits. PM Shehbaz Sharif is also expected to visit China next month to muster the required support from the friendly country.

Pakistan’s foreign currency reserves held by the State Bank of Pakistan depleted rapidly by $5.5 billion in the last six weeks period and stand at $10.8 billion now. 

Any further depletion of the foreign reserves could put the country into a crisis mode, so the government was making all-out efforts to get bridge financing from the friendly country to avoid a decrease in the foreign currency reserves till the time of reviving the stalled IMF programme.

Pakistan and the IMF had already kick-started number-crunching by sharing data and now the IMF review mission was expected to start parleys from the mid of May 2022 to accomplish the pending Seventh Review and release of the next tranche of $960 million.