Pakistan has formally requested a $1 billion oil facility from Saudi Arabia on deferred payment for 2024 as the country prepares for review discussions with the International Monetary Fund (IMF).
The specific details, costs, and terms of this Saudi Oil Facility (SOF) are yet to be finalized. This facility is part of the financing arrangement in Pakistan’s $3 billion Standby Arrangement with the IMF, which is set to expire at the end of this year.
During the last quarter of this fiscal year, Pakistan has already received $300 million through the SOF. Up to September 2023, Saudi Arabia has disbursed a total of $700 million under this facility, and an additional $300 million is expected by the end of December 2023.
However, there’s a concern regarding the Islamic Development Bank’s (IsDB) commitment under the ITFC mechanism. Initially, the IsDB was expected to provide $1 billion during this fiscal year, but they have indicated a potential reduction to around $250-500 million in syndicated loan facilities.
This decision is linked to challenges in securing dollar loans from international financial institutions due to high global interest rates. The IsDB’s final approval is expected during its board meeting in December 2023.