ISLAMABAD, (Reuters) – Pakistan’s prime minister is seeking an agreement with Saudi Arabia to defer oil payments as his country struggles to rein in yawning trade and fiscal deficits, an aide said.

The prime minister, Yousaf Raza Gilani, was due to travel to Saudi Arabia on Friday.

Pakistan’s economy is under pressure from surging oil prices, which have inflated the oil import bill over 40 percent in the past 10 months compared with year-ago levels.

The 2008/09 budget announcement, which has been delayed twice to make time for Gilani’s visit to Saudi Arabia, will be made on June 11.

“Saudi oil facility is also on the agenda,” the official, who declined to be identified, told Reuters. That refers to an arrangement to defer oil payments to the world’s biggest oil producer.

“Certainly, we have strong bilateral relations and traditionally, our leaders go first there to discuss various issues including economic cooperation.”

Pakistan’s current account deficit has surged to between 7.3 and 7.8 percent of GDP.

The fiscal deficit has spiralled to close to 9 percent but the government expects to bring it down to 6.5 percent.

The central bank has $8.7 billion in foreign currency reserves, having drained over $800 million in the last two weeks from its coffers.

The government is banking on receiving $3.5 billion in foreign capital inflows, largely in loans from multi-lateral lenders and friendly governments.

Saudi Arabia has given Pakistan a facility for deferred oil payments before, after the United States imposed economic sanctions following Pakistan’s nuclear tests in 1998