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Pakistan secures Saudi loan at $ 6B in Khashoggi murder

Riyadh says insider-turned critic Khashoggi died in a fistfight with Saudi officials, while Turkey says he was killed in a…

Riyadh says insider-turned critic Khashoggi died in a fistfight with Saudi officials, while Turkey says he was killed in a prevented murder.

Saudi Arabia has agreed to grant $ 3 billion in foreign currency support for Islamabad and one additional loan of up to $ 3 billion in deferred payments for oil imports.

“This arrangement will be in place for three years, which will be reviewed later,” said the Pakistani Foreign Ministry in a statement.

“We are Desperate”

The deal comes after a previous visit by Khan to Riyadh, his first overseas trip since he took office in July, failed to yield significant results. Before we attended this week’s conference, Khan said Pakistan, facing an acute balance of payments crisis, was “desperate” for Saudi Arabian loans to drive the economy.

“If we do not get loans from friendly countries or the IMF, we actually will not have another two or three months enough foreign currency to service our debts or pay for our imports. So we are desperate right now” , told Khan for the Middle East.

Pakistan’s finance minister Asad Umar recently said that the country may need more than $ 1

2 billion to plot its economy, as the current account deficit is expanding and foreign reserves are being lowered.

Pakistan has devalued its currency several times since December and reserves have fallen to $ 8.1 billion according to Bloomberg.

This month requested Umar’s talks with the IMF to discuss Pakistan’s second rescue operation in five years, but he said it would be the country’s last.

Plaudits and criticism

Khan expressed domestic criticism for participating in Saudi Arabia so-called Davos in the desert, but Riyadh’s commitment to financial support, greater than expected analysts, has also won him .

Dawn newspaper columnists Ayesha Ijaz Khan questioned if Saudi Arabia will expect Khan to be side to face with its version of the events in Khashoggi, compared with Turkey, another important ally of Islamabad.

“These are important questions to consider because there is no free lunch in this world,” she said. Other critics asked if the southern kingdom now expects Pakistani support for their controversial war in Yemen against the Shia Houthi groups.

Islamabad has so far opposed such a move and feared that it would create problems with nearby Shia-dominated Iran, which supports Houthi, and exacerbates the Sunnis Shia tensions in Pakistan.

But some analysts said that the benefits of the deal outweigh the criticism it has attracted.

“For Islamabad, the opting to seek financial support from a Saudi regime with fresh blood on their hands and a crushed image, poor, at least”, Michael Kugelman, South Asia’s expert at the US-based Wilson Center, told CNN.

But he added that in terms of Pakistan’s interests, the help ensures “qualifies as an unfinished success”.

“Islamabad has secured badly needed money as few states were willing to give,” he said.

Mosharraf Zaidi, a columnist and political analyst, said the deal must be seen in the context that Pakistan has to deal with complex regional dynamics “and an incredibly hungry youth-based economy.”

“This is a good start, but this only buys oxygen,” he added. “The real test is reform.”

Analysts say that Saudi Arabian loans will also reduce the size of the bailout package needed by the IMF and strengthen Pakistan’s bargaining position with the fund.

The US President Donald Trump’s administration has signaled major reservations about the IMF giving Pakistan another rescue mission that Islamabad assumes billions of dollars in debt for the China-Pakistan Economic Corridor (CPEC), a billion-dollar series of Chinese funded infrastructure projects.

“(Pakistan) can now request a slightly lower sum from the IMF, which in turn will reduce some of the political risks of attracting the Fund, a move that never fits well in Pakistani opinion law, says Kugelman .

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