Islamabad, Nov 14: IMF Warns Saudis May Halt $1.2 Billion Oil Facility to Pakistan Over Reko Diq Talks
The International Monetary Fund (IMF) has expressed concerns regarding Pakistan’s stalled $1.2 billion Saudi Oil Facility (SOF), warning of possible delays.
Saudi Arabia might be linking this facility to negotiations over the Reko Diq mining project, a key issue that could further delay funds.
Initially, Saudi Arabia pledged this support as part of a $7 billion IMF bailout package for Pakistan, but to date, the funds remain undelivered.
According to recent reports, representatives from the Saudi Fund for Development (SFD) may visit Islamabad in the upcoming month to discuss the situation in detail.
Pakistan also recently missed an important IMF deadline, which required provincial Agriculture Income Tax (AIT) alignment with federal tax standards by October 31.
This missed alignment is concerning, as the IMF views it as critical to ensuring a consistent tax policy across the nation.
IMF
Additionally, Pakistan’s forecasted $2.6 billion external financing gap worries the IMF
To address this issue, Pakistan’s Ministry of Finance has reported a recent currency swap agreement valued at 3 billion Yuan with China.
However, efforts to increase this swap limit were unsuccessful, as China declined any expansion.
Meanwhile, a separate $500 million loan from Dubai Islamic Bank remains on hold, with its release dependent on a guarantee from the Asian Development Bank (ADB).
On the revenue side, the Federal Board of Revenue (FBR) is actively working to reach its ambitious Rs. 12.97 trillion tax targets for the fiscal year, despite a shortfall of Rs. 189 billion in the first four months.
FBR Chairman Rashid Mehmood Langrial has requested a closed-door Senate briefing on ongoing IMF discussions after Senator Faisal Sabzwari raised questions about the progress in collecting the Agriculture Income Tax.
The collection of this tax remains a significant area of interest, as aligning provincial and federal tax policies is seen as a crucial step in Pakistan’s fiscal reform efforts.
The IMF’s concerns highlight Pakistan’s ongoing financial challenges, particularly with its reliance on external funds and alignment of fiscal policies to meet bailout conditions.
The outcome of the Saudi Fund’s visit and other financing efforts will be pivotal as Pakistan navigates its current fiscal and economic landscape.
