Whenever Pakistan needed a loan or faced a crisis, Saudi Arabia was the first to help it, but this time it does not seem to be happening. Saudi Arabia has refused to give any bailout or interest free loan to Pakistan. The Islamabad government is shocked by this decision of its Muslim friend.
Pakistan’s Finance Minister Ishaq Dar complains that even friendly countries are not ready to help Pakistan to overcome the economic crisis. Pakistan urgently needs a huge loan to avoid default. The country’s foreign exchange reserves currently stand at only $3 billion.
Pakistan’s army chief also ‘neutralised’
Umar Karim, associate fellow at the King Faisal Center for Research and Islamic Studies, said Pakistani officials were in a state of shock. Karim told MEE that till now Saudi Arabia and other Gulf countries used to come forward to help Pakistan on the phone calls of Prime Minister and Foreign Minister, but this time it does not seem to be happening.
Pakistan is locked in “difficult negotiations” with the International Monetary Fund over its 13th bailout package since the 1980s. If there is no settlement soon, it will be difficult for Pakistan to get international loans as its creditworthiness will be tarnished.
Analysts familiar with recent developments told Middle East Eye that Saudi Arabia has offered new interest-bearing loans and investment terms to Pakistan while implementing stricter monetary and fiscal reforms, including a sharp reduction in the current account deficit. These are similar to the terms of the IMF.
Saudi Arabia changed policy
Karim believes it sets a new precedent. He said Pakistan’s army chief has so far been a “source of reassurance” for the friendly countries. At the World Economic Forum in Davos in January, Saudi Arabia’s finance minister explained the country’s new economic policy. Mohammed Al-Jadaan said, ‘We used to give grants and deposits directly without any conditions but we are changing that. We are taxing our people, we are expecting others to do the same. He clearly said, ‘We want to help but we want you to play your part too.’