Islamabad: Saudi Arabia's decision to step in and help Pakistan comes at a crucial moment.

The world's largest exporter of crude has agreed to defer payments for crude shipments to Pakistan, at least for the current financial year (July-June).

Saudi support to Pakistan in this way comes to approximately $5.9 billion. The decision will give a big boost to the country.

Saudi shipments to Pakistan of about 110,000 barrels per day is just below one-third of the country's total daily consumption of 370,000.

The announcement will in all likelihood help stabilise Pakistan's economic and market prospects.

On Friday, the KSE-100 index on the Karachi Stock Exchange (KSE) closed down 0.66 per cent, mainly over anxieties tied to economic prospects.

The country's political outlook has also pushed down the overall sentiment. Infighting between newly elected politicians who came to power after February's parliamentary election and President Pervez Musharraf has indeed added to problems.

Difficult times

The new financial year, which began last week, immediately gave a taste of difficult times to come for the economy when the government raised oil and gas prices to cope with rising international prices.

For the moment, the Saudi gesture will not help to bring down domestic oil prices in Pakistan. The new government, in fact, says that it is committed to moving oil prices upwards in line with international trends.

However, the Saudi gesture is likely stabilising the Pakistani rupee, which has plunged 18 per cent against the US dollar since the start of the year. The slide has prompted concerns over inflation, which is already at a historically high level.

The turmoil is reflected in the way the KSE-100 has behaved in recent days. The index is down about 25 per cent from a record high in April. The overall instability promises to further weaken sentiment.

The new government needs to works on two fronts. On the one hand, it must work towards getting the best possible benefit from the market stabilisation fund of Rs50 billion announced recently.

Targeting areas that offer the best possible returns would indeed perk up sentiment.

Equally important, however, is to end the political infighting.

The writer is a journalist based in Pakistan.