Credit must be given to the present government for the $4.2 billion package it has secured from Saudi Arabia, comprising a cash deposit of $3 billion and $1.2 billion worth of deferred payments for oil. However, this should not be seen as a substitute for the IMF package, for its obtaining was merely the leading condition for the restoration of its suspended EFF. Before anyone gets hopes too high about this package, it should be noted that it does not bring with it the IMF’s ‘seal of good housekeeping’, without which the World Bank and the Asian Development Bank will not be willing to lend, and without which Pakistan would have to go the international money market with a rating approaching junk-bond for its script.
The Saudi package includes a cash component which will help Pakistan handle the loan repayments falling due this financial year, and also a deferred-oil-payment component which will help with the crisis of paying for imports, but the political cost, as Pakistan has learnt from experience, may be high. It might not have escaped memory that Saudi Arabia demanded back its deposit with the State Bank of Pakistan after Foreign Minister Shah Mehmood Qureshi spoke up about Saudi Arabia’s reluctance to let the Kashmir issue be raised at the OIC, which would have displeased India very much. Saudi investment in India has caused it to want Pakistan to draw closer to it. It would also like Pakistan not to grow too close to Iran. Saudi Arabia’s pro-US tilt will probably have it trying to get Pakistan to draw away from China.
This government success should not disguise its failure to carry out the sort of reforms that make such fancy footwork unnecessary. Indeed, it is not as if Saudi Arabia is unused to Pakistan asking urgently for help. Only three years ago, in October 2018, it had given a similar package, worth $6 billion, again to help avert an immediate crisis. At that time, there was some hope that the PTI government might carry out the sort of reforms that would make such emergency help no longer necessary, but now it seems as if the PTI is merely coasting its way to the next election, which is less than two years away. One consequence of this is that Pakistan will find that there will be political coasts. Time will tell, as it has done before, what they are.