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ISLAMABAD: Saudi Arabia is to extend long-term concessional loan of $ 500 million (Saudi Riyal, 1.875 billion) to Pakistan for different projects, official sources told Business Recorder.

In this regard, both countries will sign Framework Memorandum of Understanding (MoU) during the three day visit of Prime Minister Imran Khan, staring from Friday (today).

The Economic Affairs Division (EAD) recently briefed the Federal Cabinet that during the forthcoming visit of the Prime Minister of Pakistan to the Kingdom of Saudi Arabia, the Economic Affairs Division and Saudi Fund for Development (SFD) intended to enter into a Memorandum of Understanding (MoU).

Under the pact, SFD would provide long-term concessional financing of US$ 500 million (equivalent to Saudi Riyals 1,875 million) for following projects: (i) Mohmand Dam Hydro Power Project;(ii) Jagran Hydropower Projects-IV; (iii) Shounter Hydro power Project; (iv) Jamshoro Power Generation Project; (v) Mansehra Water Supply Project; and (vi) Abbotabad-Muzafarabad Road Project.

The sources said list of projects is tentative, which could later be amended by mutual consent of the parties. Furthermore, financial allocations to projects would be need-based on the basis of their state of readiness.

According to sources, stand alone loan agreements would be signed for each of the projects which would stipulate detailed financing modalities, including tenure and interest rate. Normally, financing from SFD is long-term and concessional.

The sources said, MoU had been cleared by the Finance Division and duly vetted by the Law & Justice Division. In terms of Rule (16) (1) (h) of the Rules of Business, 1973, Federal Cabinet has also approved the MoU for signing with Saudi Fund for Development (SFD).

Copyright Business Recorder, 2021

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