19/11/2018 08:02 AST

Pakistan is likely to receive the first tranche of $1 billion under the balance of payments support from Saudi Arabia within the next couple of days, boosting its plummeting foreign currency reserves.

The money would hopefully reach the State Bank of Pakistan (SBP) by Monday, Finance Minister Asad Umar said adding: “My Saudi counterpart has given me an assurance in this regard.”

The second and third tranche will be received over the next two months. Last month Saudi Arabia agreed to provide a $6 billion package to Pakistan to support its ailing economy. The package included $3 billion balance of payments support and another $3 billion in deferred payments on oil import.

Umar said the facility of deferred payment on oil import would mature by next month. However, he said that the immediate balance of payments crisis has been overcome with the help of bilateral assistance from Saudi Arabia and China.

“This will be an unprecedented help from China,” the minister said, adding that he had committed not to disclose details before it was finalised. “I will not divulge the details at this moment.”

He claimed that the only reason of going to the International Monetary Fund (IMF) was to accelerate the pace of economic growth and not to seek loan to fill any gap. He explained that he was not negotiating terms of a loan but of a broader economic reforms package. The available IMF funding quota for Pakistan is approximately $6-6.5 billion.

The government has taken several steps including reduction in expenditures to bring drastic cut in the current account deficit. “We will reduce the current account deficit to $12 billion by the end of June 2019, almost $7 billion reduction,” the minister declared, explaining that this was the government target for the first year.

He said the IMF package would play a small part in filling the balance of payments gap directly though it would pave the way for getting loans from multilateral donors and commercial creditors.

The Gulf Today

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