Khan also attended a high-profile investment conference that opened in the Saudi capital on Tuesday.
The $3 billion direct payment to with Pakistan will be “as balance of payment support,” while another one-year deferred payment facility of up to $3 billion for oil imports was agreed, according to a memorandum of understanding signed by the finance ministers of both nations on Tuesday.
“It was agreed Saudi Arabia will place a deposit of $3bn for a period of one year as balance of payment support,” said Pakistan’s foreign ministry.
The additional deferred payment facility for oil imports will be in place for three years, which will be reviewed thereafter, the ministry further stated.
Khan, despite his government announcing earlier this month that it will seek assistance from International Monetary Fund—has again recently voiced his reluctance to turn to the fund for Pakistan’s 13th bailout since the late 1980s. South Asia’s second-largest economy is facing its latest balance-of-payments crisis as imports for Chinese- financed infrastructure projects rise while its exports lag the region.
Since coming to power in July elections, the former national cricket captain has been seeking financial support from friendly countries including China, Saudi Arabia and the United Arab Emirates, with little success until now. Finance Minister Asad Umar has said Pakistan may need more than $12 billion to plug its finances as the current-account deficit widens and foreign-currency reserves plummet.
The rupee on the other hand has already been devalued multiple times since December and hiked interest rates the most in Asia. Reserves have plunged more than 40% this year to $8.1 billion.
While the “far larger” than expected Saudi windfall won’t address all Pakistan’s needs it will “help Pakistan to negotiate a smaller loan facility from the IMF with less stringent conditions,” said Mohammed Sohail, chief executive officer of Karachi-based brokerage Topline Securities Ltd.
Elsewhere, Khan has also faced criticism at home for attending the Future Investment Initiative in Riyadh this week after it emerged that Jamal Khashoggi, a prominent Saudi critic, was killed inside the kingdom’s consulate in Istanbul this month.