Pakistan Takes $6 Billion Loan From Saudi Arabia Despite Backlash Over Khashoggi Killing
Saudi Arabia is facing an enormous backlash after one of their own journalists, Jamal Khashoggi, was found to have been murdered inside their consulate in Istanbul, Turkey. But while most of the world is currently seriously considering cutting their ties with the Middle Eastern country and slapping sanctions on them, others don’t have the luxury of such action.
Pakistani Prime Minister Imran Khan has just secured a $6 billion loan from Saudi Arabia, according to CNN.
On Tuesday night, Saudi Arabia hosted an investment conference in Riyadh, and although many world leaders suddenly pulled out of the conference in the past week due to the ongoing fallout over Khashoggi’s death, Khan still attended. Just last week, the Pakistani leader admitted his country was “desperate for Saudi loans to shore up the economy.” As a result, he could not afford to decline his invitation to the conference.
“Unless we get loans from friendly countries or the IMF, we actually won’t have in another two or three months enough foreign exchange to service our debts or to pay for our imports. So we’re desperate at the moment.”
The resulting deal will see Saudi Arabia give Islamabad $3 billion in foreign currency support for the next year, as well as another $3 billion in deferred payments for oil imports.
Leaders around the world are condemning Prince MBS for the gruesome death of journalist Jamal Khashoggi and criticizing Saudi Arabia's involvement in Yemen. Nevertheless, PM Imran Khan flew to Riyadh and secured a $6bn loan from the controversial kingdom. What do you think? pic.twitter.com/FvMUd18xxP
— Soch ??? (@SochVideos) October 24, 2018
Khan faced massive criticism for agreeing to still attend the meeting in light of the murder of Khashoggi, but the large payout he received as a result also won him the favor of many Pakistanis. However, many are still worried about what he had to agree to in order to get the Saudis to sign the check. While some are concerned that Pakistan will be forced to take Saudi Arabia’s side in the still-developing story surrounding Khashoggi’s death, others are more worried that the country will be dragged into the controversial war in Yemen against Shia Houthi groups.
Michael Kugelman, a South Asia expert, pointed out that Pakistan was short on options for financial aid.
Pakistan’s Foreign Ministry explained that the deal will be in place for three years, after which the two countries will review it again. Even with the $6 billion pledged by Saudi Arabia, it may not be enough to fill the holes in Pakistan’s economy. Finance Minister Asad Umar recently estimated that the country would need around $12 billion as the current-account deficit widens and foreign currency reserves plummet.
The country has already devalued its currency multiple times since December, and the reserves have dropped to $8.1 billion. Umar has requested a scheduled meeting with the IMF in order to discuss a second bailout for the country in just five years.