ISLAMABAD – Pakistan has returned $1 billion to Saudi Arabia as a second instalment of a $3 billion soft loan after China getting financial assistance in wake of commercial loan from China.
Islamabad paid first instalment of $1 billion to Riyadh in August this year while the third and last instalment will be repaid in January 2021.
With the $1 billion flowing out, Pakistan – which has $13.3 billion in central bank foreign reserves – could face a balance of payments issue after clearing the next Saudi installment, the Reuters reported citing officials.
An official of the foreign ministry told the news agency that China had come to rescue Pakistan in this situation.
China has reportedly agreed to provide financial aid to the tune of $1.5 billion to Pakistan for pay off the loan of Saudi Arabia.
The development comes a day after it emerged that China agreed to provide financial aid to the tune of $1.5 billion to Pakistan for pay off the loan of Saudi Arabia.
According to the report, the financial help would not add to the Pakistan’s loans as it is being released as an increase in the size of a 2011 bilateral Currency-Swap Agreement (CSA).
China and Pakistan reached the CSA in December 2011 with an aim to promote bilateral trade, finance direct investment, and provide short-term liquidity support.
In 2018, Saudi Arabia had paid $3 billion in foreign currency support for a year and a further loan worth up to $3 billion in deferred payments for oil imports to help Pakistan drive out of economic woes.