look news india
Amidst global diplomacy and deep economic crisis, Saudi Arabia has once again extended a helping hand to its old ally Pakistan. Saudi Arabia has given a big relief to Pakistan, which is facing serious foreign exchange crisis and cash crunch. 5 Approval has been given to rollover billion dollar central bank deposits (loans) for the third time. This decision is being seen in international circles as a reward for the longstanding loyalty and strategic partnership between the two countries.
Pakistan, which was on the verge of default, got a big saving grace.
Pakistan has been going through the worst economic phase in its history for a long time, where it has to depend on external help all the time to repay foreign loans and run the country. Pakistan has got immediate relief by Saudi Arabia not demanding return of this amount of 5 billion dollars and extending its period. If Saudi had not taken this step, Pakistan would have faced a big crisis regarding foreign payments and the country could have come into default. This financial assistance will greatly help the Central Bank of Pakistan (State Bank of Pakistan) in stabilizing its declining foreign exchange reserves.
Why was it necessary for the conditions and loan of International Monetary Fund (IMF)
Actually, Pakistan is currently expecting a big bailout package from the International Monetary Fund (IMF). One of the biggest conditions of IMF is that Pakistan’s friendly countries (like Saudi Arabia, China and UAE) should give rollover guarantee of the old loans given by them. After this latest decision of Saudi Arabia, the way for Pakistan to get a new loan from IMF has become largely clear. Economic experts believe that this step of Saudi is completely political and strategic, because it does not want to let its traditional ally in South Asia disintegrate completely.
Big political relief to Shahbaz government on domestic front
This decision has not only given breathing space to Pakistan’s economy, but has also given a big political relief to the troubled Shehbaz Sharif government on the domestic front. Amidst sharp attacks from the opposition and public anger over rising inflation, the government is now presenting this financial assistance as its diplomatic victory. However, experts also say that rollover of loan is only a temporary solution. Unless Pakistan makes drastic reforms in its internal tax structure, exports and fundamental economic policies, it will be impossible to get out of this debt trap.