Pakistan to receive $4.5 billion 'oil financing facility' from Saudi Arabia's Islamic Development Bank over three years

Islamabad: Cash-strapped Pakistan said on Saturday that the Islamic Development Bank (IDB) was providing it with a three-year $4.5 billion oil financing facility, which will ease pressure on its balance-of-payments.[caption id="attachment_5514141" align="alignleft" width="380"]

Representational image. Reuters[/caption]The finance ministry said that $1.5 billion worth of oil on deferred payment each year by the bank had been agreed upon. The program will continue for three years.The facility was already activated in July 2018 and the ministry said Pakistan received oil worth $100 million in the first phase under the agreement with IDB.Pakistan is also negotiating an $8 billion bailout package from the International Monetary Fund (IMF) to overcome a severe balance-of-payments crisis that threatens to cripple the country's economy. The government reached out to some "friendly countries" for economic assistance including Saudi Arabia, China and the UAE since Prime Minister Imran Khan assumed office in August and has received financial help to a great extent.The government was also working with the IDB for a similar agreement to provide Liquefied Natural Gas (LNG) on deferred payments. The arrangement with the IDB is in addition to the agreement with Saudi Arabia to provide oil worth $3 billion on deferred payments.Officials said the oil supply as part of the arrangement with Saudi government will start by the middle of February.Pakistan is also engaged with the UAE to get a facility on the pattern of Saudi Arabia. Both Saudi Arabia and UAE also agreed to provide $3 billion each to ease the pressure. Riyadh has already credited the pledged $3 billion while UAE has provided $1 billion so far.Pakistan foreign reserves were boosted after payments by the friendly countries, giving enough time to the government to negotiate a bailout package with the IMF, according to officials.