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Monday, October 3, 2022
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EditorialSaudi largesse and tough conditions

Saudi largesse and tough conditions

Pakistan’ ailing economy has taken a sigh of relief after the Saudi government has made an announcement to extend its deposit of US $ 3 billion to Pakistan. However, the Saudi largesse has certain ramifications, which make it a formidable loan. Tough conditions include a high interest rate of 4 percent besides, Saudi Arabia could demand an immediate return of the money in case of a sovereign default by Pakistan. Reportedly, a delay in timely interest payment would be deemed as default.

On its part, Pakistan has no choice except complying with all tough demands. Because, debilitating economic conditions are in dire need of such a financial support as Pakistan is now largely dependent on loans or aid due to depleting foreign reserves and flood disaster. Pakistan and Saudi Arabia enjoy historical relations and both are interdependent on each other regarding various issues. Pakistan relies on the Kingdom in terms of financial support in the form of soft loans and borrowing of oil. Moreover, the Kingdom is also the largest source of foreign remittances for Pakistan. Due to the lack of economic opportunities back home, many Pakistanis travel to the Kingdom to feed their families back in Pakistan. As such, a large number of Pakistanis have been a part of the workforce in Saudi Arabia. Reportedly, the Pakistani workforce contributes $7 billion, or a quarter of the country’s total annual remittances. While Saudi Arabia has been helpful in abating Pakistan’s economic woes, the latter has also been instrumental in providing military support to the former to help fight militant groups. Besides, the Kingdom is entangled in various regional issues like the Yemen conflict, a proxy war with Iran and the threat of IS militants. These issues prompt Saudi Arabia to garner regional support and Islamabad is one of the key allies of Riyadh. Although, a spirit of friendship, alliance and mutual cooperation do exists between the two brotherly states, yet the relations are also based on mutual interests.

Currently, the Saudi government’s decision to extend the deposit has given some hope and provided some relief to the PML-N government. Surely, the bail-out was inevitable for Pakistan’s economic survival, but the terms and conditions for this Saudi generosity are tough, which necessitate a policy review by Pakistan while taking any loans from any state. When a country receives aid or foreign loan, its sovereignty is also compromised to some extend besides; it also affects policy decisions on regional issues. Despite historical relations, any financial support from the Kingdom does not come without certain demands and conditions. Pakistan had already played the role of a mercenary for Saudi Arabia in the past and it is once again getting entangled in the same net. It is high time for the government to shun the politics of compromise and tell truth to the nation.

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