Saudi Arabia is like our elder
brother and has always helped Pakistan in difficult times. The recent aid by
Saudi Arabia on the request of Prime Minister Imran Khan is indeed a
sympathetic gesture but it is neither first nor enough. Saudi Arabia is giving such
grand favours to Pakistan since day one and supported us in the two wars with
India in 1965 and 1971 also. This time, Saudi Arabia was kind enough to give us
‘Deferred Oil Payments Relief’ by increasing the payment period from three
months to one year. The relief package shows that now Saudi Arabia would be
selling its oil to Pakistan with an extended period of 12 months instead of 3
months.
On the invitation of the then
Prime Minister of Pakistan Shaheed Zulfiqar Ali Bhutto, in 1974 King Shah
Faisal of Saudi Arabia helped Pakistan to host the OIC Summit in Lahore. The
historical summit was attended by great charismatic leaders i.e. King Shah
Faisal of Saudi Arabia, Syrian President Hafez al-Assad, President Mohammad
Muammer Gaddafi of Libya, President Houari Boumedienne of Algeria, Prime
Minister Tun Abdul Razzak of Malaysia, Mr. Yasser Arafat Chairman of the
Palestine Liberation Organisation, President Anwer Saddat of Egypt and others.
The major support came from
Saudi, when Shaheed Zulfiqar Ali Bhutto- the architect of the country’s atomic
programme, said in an interview in 1965 ‘’we (Pakistan) will eat grass, even go
hungry, but we will get one of our own (atom bomb).... we have no other
choice”. Pakistan had achieved the capability to detonate a nuclear bomb by the
end of 1984, the development of which had begun in January 1972 under Prime
Minister Zulfiqar Ali Bhutto. Pakistan became the first Islamic Nuclear State
with brotherly help of Saudi Arabia and some other Muslim Countries. On 28 May,
1998, when Pakistan successfully conducted nuclear tests and subsequently
sanctions were imposed by West, Saudi Arabia came forward and helped us by
supplying 50,000 barrels of oil free of cost per day for one year. Besides,
more than 1.5 million Pakistanis are working in Saudi Arabia contributing 10 %
of total remittances being received from overseas Pakistanis.
This time, when the country is
passing through financial crisis, on the request of Pakistani Prime Minister,
Saudi Arabia again came forward and announced a ‘Relief Package for Pakistan’.
According to the reports, the Saudi Arabia has agreed to give Pakistan $3
billion in foreign currency support for a year and a further loan worth up to
$3 billion in deferred payments for oil imports. Saudi Arabia will place a
deposit of $3billion in our Central Bank, which will remain as a deposit in the
name of Saudi treasury. This amount will remain there as balance of payment
support and Pakistan will neither be able to use it for any of its economic
needs nor will it be able to use it for repayments to International Monetary
Fund -IMF. It must be mentioned here and the nation must know the fact that
this Saudi package is neither a loan nor a grant and it should be treated as
normal fixed deposit of a client in our Central Bank. The deposit would be
withdrawn after a period of one year by the Saudi Government from Central Bank.
This nominal deposit of $3 billion is not going to bring any qualitative
changes to the economic burdens we are facing. This deposit will merely reflect
our foreign reserves but the higher inflation rate will continue to increase and
the price hike will continue even if the growth rate increases by some
fractions.
Prime Minster Imran Khan has said
that the Saudi Government has announced this amount of $3 billion for oil on
deferred payment for one year whereas Saudi Arabia was already giving oil to
Pakistan on the basis of three months deferred payment facility. The Prime
Minister also claims that it cannot be treated as loan hence cannot be used to
pay off the IMF repayments. This amount shall be used to buy crude oil only on
some fixed FOB price and the additional cost will be added to make it C&F
delivery to Pakistan. This ‘Defer Oil Payments Relief’ by Saudi Arabia is
actually a business deal to sell the oil on easy conditions and extended period
of payment, in other words a help in goods rather than cash.
The situation has raised the
following common questions to be answered by Mr. Asad Umar, Finance Minister of
Pakistan.
Will Pakistan have to pay some
interest/ profit on this fixed deposit if it is allowed for investment purpose?
What are the terms of agreement
on deferred payment for oil and will it be on spot basis cargo or through
regular supHas Saudi Arabia allowed the using of $3billion deposit for economic needs of Pakistan?
ply?
If it is regular supply then I
want to ask if it will be purchased on Brent basis or the ORB (OPEC Reference
Basket). And, are the prices fixed or would be fixed on each cargo?
Will the supply be on FOB basis
or the C&F?
Will there be interest on these
deferred payments? And what are the present terms of Saudi sweet light crude
oil presently being supplied by Aramco?
Will both the Governments agree
on the existing terms of sale / purchase as decided by Aramco?
What volume / quantity in terms
of barrels per month is agreed and how many cargos?
Is this help from Saudi Arabia
going to fulfil our entire requirement?
The above questions should be
taken in positive direction, as these are my questions for my Government as a
Parliamentarian. This relief is not going to solve our deep-rooted economic
crunches and it looks Pakistan will have to go to IMF for further loan. The
economic specialists cannot cure this ailing economy with a Panadol only rather
it needs very skilful economic surgery by infusing SOS measures in mobilisation
of our own richly available resources. Nation needs a pragmatic economic plan
whereas it is still being kept in dark vis-à-vis knowledge of the grave growing
economic situations of the country and forthcoming tsunami of price hike, which
will add further miseries for common people.
I pray that May Allah help our
nation to get out of these grave economic crises.
The Article has been Published in
‘’The Nation’’ on October 26th, 2018
The Link to Article is: https://nation.com.pk/26-Oct-2018/625844
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