Islamabad, Aug 22: In order to offset oil prices shocks, the Saudi Government has reportedly decided to give Pakistan a 500 million-dollar grant instead of an oil import facility on one-year deferred payment, sources in Pakistan Petroleum Ministry said.

They said that the grant would help improve Pakistan’s foreign exchange reserves position and reduce its fiscal deficit. The hike in POL prices in recent months has strained country’s resources severely, the Daily Times quoted them as saying.

The Saudi move to award the grant comes in the wake of Prime Minister Yousuf Raza Gilani’s visit to Saudi Arabia, during which it was discussed that Saudi Arabia could either provide grant to ease payments on oil import or grant oil credit facility on deferred payment, said the sources.

The Saudi grant would be the second such concession during the current financial year as the Saudi government had provided 300 million dollars to Pakistan in March to control budgetary gaps.

According to officials, the previous grant had come after former President Pervez Musharraf’s visit to Saudi Arabia.

Pakistan imports 110,000 barrels of oil per day and around 40 million barrels a year. If the two countries had agreed on an oil credit facility on one year deferred payment, Saudi Arabia would be providing Pakistan a foreign exchange cushion of six billion dollars. (ANI)