Oil Report

Saudi Arabia set to let Pakistan defer oil payments

KARACHI, July 22 (Reuters) - Saudi Arabia is in talks to allow Pakistan to defer payments for crude oil sales during the current fiscal year, Pakistan’s de facto finance minister Naveed Qamar said on Tuesday.

“We are in talks with Saudi Arabia about the oil facility and there will be an announcement soon from Saudi Arabia,” Qamar told an audience at the Karachi Stock Exchange, where he was visiting to reassure investors after a precipitous fall in share prices.

Earlier this month the Financial Times newspaper reported that Saudi Arabia had agreed in principle to defer payments for crude oil sales to Pakistan expected to be worth about $5.9 billion during the current 2008/09 fiscal year (July/June).

The agreement would provide considerable relief for the Pakistani government, which is wrestling with annual inflation at a three-decade high above 19 percent and growing fiscal and current account deficits, due largely to a soaring oil import bill.

Foreign exchange reserves have also fallen sharply, largely because of the oil payments and withdrawals from Pakistan’s stock market. (Reporting by Sahar Ahmed)