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Pakistan requests Saudi-based IsDB for additional oil financing, waiver of service charges

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6 months ago

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  • Pakistan asking IsDB to jack up oil facility from $50m to $100m.
  • IsDB has proposed services charges of less than 1%.
  • It is yet to be seen how Pakistan’s request would be entertained.

ISLAMABAD: The Islamic Development Bank (IsDB) has proposed enhanced service charges on Pakistan’s request for an additional oil financing facility but Islamabad has requested the lender to give a waiver, reported The News on Thursday.

Officials of the Prime Minister’s Secretariat told The News that after striking the staff-level agreement with the International Monetary Fund (IMF), Pakistan is negotiating with the Jeddah-based lender to jack up the oil facility from $50 million to $100 million for the end of December 2023. They are also discussing the possibility of reducing the level of service charges imposed on this facility.

“IsDB has proposed services charges of less than 1% on the committed oil facility but we made a request to grant us a waiver or reduce it,” an official told the publication.

The term sheet shows that the service charges are around 0.05% to 0.5%. The IsDB had already provided $100 million in September 2023 for oil financing and has indicated that it may provide a $50 million facility till the end of December.

It is yet to be seen how Pakistan’s request will be entertained by the IsDB management and its board when it meets on December 11.

The IsDB’s Executive Board is also set to meet next month to approve syndicate financing of $300 million.

With the signing of SLA with the IMF, all other multilateral creditors including the World Bank, Asian Infrastructure Investment Bank (AIIB) and Asian Development Bank (ADB) have responded positively and shown an inclination to resume programme loans.

As per The News, the three multilateral institutions are ready to give approval for programme loans in December 2023.

The ADB board is expected to hold a meeting on December 4 in Manila to consider the Domestic Resource Mobilization (DRM) programme loan of $350 million for Pakistan.

The WB is expected to grant approval to RISE-II on December 20 while the AIIB is going to consider approval of $250 million on December 21 just a few days before the start of the Christmas and new year holidays.

The IMF’s Executive Board date has not yet been confirmed or communicated when it would meet to grant approval for Pakistan’s next tranche. It might be held either on December 7 or December 13 or 14.

However, it is likely that the IMF’s Executive Board may grant approval for $700 million tranche before the Christmas holidays.

If everything gets materialised, then Islamabad is expecting a disbursement of $1.7 to $1.8 billion during December.

Out of the total gross financing requirement of $25 billion, Pakistan has so far materialised $5 billion from all multilateral and bilateral creditors in the shape of disbursements of loans and time deposits. 

The EXIM Bank of China also granted a rollover of $1.2 billion so far for the current fiscal year.

Pakistan has also made a fresh request to credit rating agencies to review their ratings after approval of the next tranche from the IMF next month.

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Pakistan’s gold prices are still declining; see the most recent

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5 days ago

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The price of 10-gram gold reduced by Rs943 to settle at Rs207,733, while the price of gold dropped by Rs1200 to close at Rs242,300 a tola, according to the Sindh Sarafa Jewellers Association.

In the global market, the price of the precious metal fell by $10 to $2,349 per ounce, resulting in losses.

At 04:48 GMT, the spot price of gold had dropped by 0.2% to $2,354.77 per ounce. In the previous session, prices reached a two-week high.

American gold futures dropped 0.6% to $2,361.

Spot silver decreased by 0.4% to $28.03 per ounce, while palladium remained steady at $978.03 and platinum decreased by 0.1% to $992.89.

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Pakistan and the IMF begin talks for a new loan.

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5 days ago

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Pakistan is requesting a $6 to $8 billion bailout package from the international lender over the next three to four years to address its financial troubles.

A mission team led by Nathan Porter, the IMF’s Mission Chief in Pakistan, is meeting with a Pakistani delegation led by Finance Minister Muhammad Aurangzeb.

According to sources familiar with the situation, Islamabad may face more difficult options, such as raising power and gas bills.

Mr. Aurganzeb informed the IMF team that the country’s economy has improved as a result of the IMF loan package, and Islamabad is ready to sign a new loan programme to further develop.

The IMF mission expressed satisfaction with Islamabad’s efforts to revive the country’s struggling economy.

The IMF praised Pakistan’s economic growth in its staff report earlier this week, but warned that the outlook remains challenging, with very high downside risks.

The country nearly avoided collapse last summer, and its $350 billion economy has stabilized since the end of the last IMF program, with inflation falling to roughly 17% in April from a record high of 38% last May.

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Business

Petrol prices are likely to drop significantly beginning May 16.

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5 days ago

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According to sources, the government is set to decrease petrol prices by Rs 14 per litre and diesel prices by Rs 10 on May 16 for the next fortnight’s revision.

Last month, the government reduced the price of fuel and high-speed diesel by Rs5.45 and Rs8.42 per fortnight, respectively.

The current fuel price is Rs288.49 per litre, while the HSD price is Rs281.96.

Meanwhile, oil prices fell further on Monday, as signs of sluggish fuel consumption and comments from U.S. Federal Reserve officials dimmed optimism for interest rate reduction, which may slow growth and reduce fuel demand in the world’s largest economy.

Brent crude prices down 25 cents, or 0.3%, to $82.54 a barrel, while US West Texas Intermediate crude futures fell 19 cents, or 0.2%, to $78.07 per barrel.

Oil prices also declined on signals of poor demand, according to ANZ analysts, as gasoline and distillate inventories in the United States increased in the week before the start of the driving season.

Refiners throughout the world are dealing with falling diesel profitability as new refineries increase supply and warm weather in the northern hemisphere and weak economic activity reduce demand.

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