Zardari seeks urgent Saudi funds

By M Ilyas Khan BBC News, Karachi

The president is facing a balance of payments crisis

Pakistani President Asif Ali Zardari left for Saudi Arabia on Tuesday on a two-day visit to seek assistance for Pakistan's cash-strapped economy.

Mr Zardari's visit comes at a time when Pakistan needs urgent funds to tide over its trade and budget deficits.

Economic, political and military co-operation between the two countries goes back several decades.

Both worked together during the Soviet invasion of Afghanistan and again in the continuing US-led "war on terror".

International obligations

According to the Pakistani foreign office, Mr Zardari will seek Saudi oil shipments against deferred payments of up to two years to reduce pressure on the country's trade imbalance.

He will also seek Saudi support for the forthcoming meeting of a group of countries called the "Friends of Pakistan" (FOP), the foreign office said.

Pakistan regards Saudi Arabia as one of its oldest and richest friends

The FOP nations include the US, UK, France, Saudi Arabia, China, the UAE and several other countries. They are meeting in Abdu Dhabi on 17 November to devise ways of stabilising Pakistan's economy.

Officials say Pakistan needs more than $5bn within a month to meet its international obligations.

Such upfront cash is unlikely to be furnished in time by any of the FOP nations because of procedural impediments.

Pakistan has been contemplating a short-term loan from the International Monetary Fund (IMF), but says this would be its last resort, given the IMF's stringent conditions.

"Saudi Arabia has always helped Pakistan in difficult times," Mr Zardari told the Saudi Gazette newspaper in an interview ahead of the visit.

"I will solicit Saudi support for the Friends of Pakistan initiative," he said.

Pakistani officials believe an oil facility from Saudi Arabia could help the country avoid the IMF loan, or at least put it on a better footing to negotiate for more favourable IMF conditions.

The Saudi leadership is already considering a Pakistani request for deferred oil payments which was made by Pakistani Prime Minister Yousuf Raza Gillani during his visit to Saudi Arabia in July.

Meanwhile, Mr Zardari is expected to hold wide-ranging talks with Saudi authorities on other issues, including bilateral trade, Saudi investment in Pakistan and security issues that confront the Muslim world.

A large team of Pakistani economic experts left for Saudi Arabia on Monday to hold preliminary talks with the Saudi officials before Mr Zardari's visit.

Mr Zardari is accompanied by several advisers in addition to the ministers of defence and law.

Pakistan has been actively seeking foreign investment in the fields of power, infrastructure development, agriculture and industry.

President Zardari will also seek an expansion in bilateral trade. The current trade volume between the two countries stands at $5.7bn.