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Saudi Arabia agreed to provide Pakistan amount of $3 billion

24 October, 2018

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RIYADH/ISLAMABAD: In a major relief for the cash-strapped Pakistan Tehreek-e-Insaf (PTI) government, Saudi Arabia on Tuesday agreed to provide Pakistan an amount of $3 billion to tackle its balance of payment crisis, besides agreeing to one-year deferred payment facility for import of oil worth up to $3 billion from the kingdom.

“An MoU was signed between Finance Minister Asad Umar and Saudi Finance Minister Muhammad Abdullah Al-Jadaan. It was agreed that Saudi Arabia will place a deposit of USD 3 billion for a period of one year as balance of payment support,” a statement issued by the PM Office said. “It was also agreed that a one-year deferred payment facility for import of oil, up to USD 3 billion, will be provided by Saudi Arabia. This arrangement will be in place for three years and will be reviewed thereafter,” it added.

“The earlier visit of a Saudi delegation had evaluated the possibility of investing in a petroleum refinery in Pakistan. Saudi Arabia confirmed its interest in this project and an MoU will be signed after obtaining cabinet approval,” the statement said. “Saudi Arabia expressed interest in development of mineral resources in Pakistan. For this purpose, the federal government and the government of Balochistan will hold consultations, following which a delegation from the Kingdom will be invited to visit Pakistan,” it added.

Prime Minister Imran Khan and Custodian of the Two Holy Mosques King Salman bin Abdulaziz discussed bilateral relations and regional and international situation at a meeting in Riyadh. Both the leaders expressed their desire to further strengthen the bilateral cooperation. They also discussed issues of mutual interest, trade, investment and economic ties, the PM Office said in a separate statement.

Issues of Pakistani workforce and labourers were also discussed and the Saudi king directed the ministry concerned to immediately resolve those issues.

The prime minister also had a detailed discussion with Crown Prince Muhammad bin Salman. The crown prince agreed to the prime minister’s suggestion to reduce visa fee for Pakistani workers, a significant step towards enhancing Pakistani workforce in Saudi Arabia as well as facilitating travel of people from both the countries.

Saudi Minister for Finance Mohammed al-Jadaan, Minister of Commerce and Investment Dr Majed Al-Qasabi and Minister for Energy, Industry and Mineral Resources Engineer Khalid Al Falih also called on Prime Minister Imran Khan.

During the meeting, the prime minister highlighted the investment opportunities in energy and different sectors of Pakistan. Saudi Development Fund Chairman Ahmad Al-Khateeb and head of Public Investment Fund Yasir Al-Rumayyan were also present during the meeting.

The prime minister informed the Saudi ministers about the functioning of one-window operation in Pakistan for the enhancement of foreign and local investment and facilitation of the business community. A special cell to extend facilities to the business community had also been established, he added.

The Saudi ministers expressed their interest in the economy of Pakistan and discussed projects under the bilateral investment. During the meeting, the progress on matters discussed during Saudi delegation’s visit to Pakistan was also reviewed. The Saudi energy minister would soon visit Pakistan to give final shape to the agreed projects.

Earlier in his address to a session on Pakistan at the Future Investment Initiative Conference, Prime Minister Imran Khan said Pakistan was creating an enabling environment, undertaking tax reforms and setting up a one-window operation to attract foreign investors in diverse areas. “This is the best time to invest in Pakistan,” he said, adding that his 60-day old government has undertaken a gigantic task of structural reforms to address the issues of mismanagement and corruption with the sole objective to significantly move the country up on the index of ease of doing business.

The prime minister mentioned the restructuring and re-evaluation of changes in customs duties on different items and provision of better tax incentives so as to make Pakistan a more attractive place for investment. “With its excellent geo-strategic location, Pakistan lies at the confluence of the Middle East, the Gulf and the Central Asian Republics,” he said.

He mentioned the large 100 million population under the age of 35 who could serve as a strong workforce for investors in any area. He attributed the little foreign investment in the past 10 to 15 years to mismanagement of the previous governments, corruption and also to country’s involvement in the war against terror. He said the government was ensuring that things improve and all facilities are available to the foreign investors.

Imran Khan said Gwadar was the second deepest port in the region and offered easy access to China and, with improvement in peace situation in Afghanistan, to the Central Asian Republics. He said the China-Pakistan Economic Corridor (CPEC) would serve as a huge incentive for foreign investors who could invest in many areas and benefit from the access to several regional markets from Pakistan. He mentioned energy, minerals, infrastructure, housing and tourism sectors which offered great incentives for investment. He said his initiative of building five million houses in the next five years would generate a lot of economic activity, create employment opportunities and help the country provide shelter to the poorest of its poor.

Imran said Pakistan also had rich reserves of oil and gas, gold and copper that needed to be exploited and could help turn around the country’s economy. A strong proponent of tourism, the prime minister said with 12 climatic zones and a range of geographical wonders like the highest peaks in the world to the deep blue waters in Gwadar, there was a great scope for investment in the tourism sector.

Imran Khan said in his talks with Crown Prince Mohammad bin Salman bin Abdul Aziz, he was informed that a large delegation of Saudi investors would soon visit Pakistan, adding that the delegation would be comprehensively briefed about the incentives and opportunities available. He also acknowledged the high-level talks between the two countries for setting up an oil refinery in the country and said Pakistan currently requires two large refineries to cope with its growing oil requirements.

The prime minister said owing to the great sacrifices by the security forces, Pakistan was today a safe and secure country. He said the incidents of terrorism happening now in the country were negligible, and said the few terror incidents had links to Afghanistan. He hoped that with success in ongoing peace talks with the Taliban and the Afghan government and the United States, the situation would improve further.

The prime minister said Pakistan currently faced two serious problems: the current account deficit and the fiscal deficit, adding that Islamabad was currently in negotiations with the International Monetary Fund (IMF) for a bailout package. He said his government was also in contact with friendly countries to get funds to help it repay the huge loans borrowed by the previous governments. “We have a tough period ahead, but with our structural reforms in place and the funding, we will be able to improve the situation in three to six months,” he said.

When asked about his forthcoming visit to China, Imran said he looked forward to learning from their experience as how they tackled the poverty as well as measures they took to end corruption. Imran Khan said peace between Pakistan and India was important to ensure that resources of the two countries be diverted towards human development rather than wasted in non-productive arms race. “Peace with India is not just important for Pakistan, but for India as well.

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