Pakistan Secures $1.6 Billion Oil Deferral Deal with Saudi Arabia

Saudi Arabia has signed a $1.6 billion oil payment deferral agreement with Pakistan, witnessed by senior Pakistani officials, including the Prime Minister, Deputy Prime Minister, and Finance Minister. On the Saudi side, the deal was represented by the CEO of the Saudi Fund for Development.

This is not the first time the Kingdom has extended such a facility to Pakistan, underscoring the country’s ongoing economic fragility, particularly its dwindling foreign exchange reserves. The deferred payment arrangement aims to ease balance of payments pressures, a challenge Pakistan has historically addressed by curbing imports—often at the expense of local industries reliant on foreign raw materials.

Despite the agreement, the total petroleum imports for July-December 2024 saw only a marginal decline, indicating that the facility may not significantly alter Pakistan’s financial landscape. Meanwhile, fuel prices, including petrol and high-speed diesel, remained stable in late January, with a slight decline in LPG rates, benefiting the lowest-income groups.

However, concerns persist over economic data accuracy, as highlighted in IMF reports, which stress gaps in GDP calculations and government finance statistics. Experts warn against manipulating inflation data to project economic stability and urge the government to focus on reducing expenditures rather than relying solely on increased taxation and external financial support.

Source: Business Recorder