Pakistan has returned $1 billion to Saudi Arabia as the second installment of a $3 billion soft loan. For this purpose, Islamabad reaches out to Beijing for a commercial loan.This will help it offset pressure to repay another $1 billion to Riyadh next month, officials said on Wednesday.
Analysts say it is unusual for Riyadh to press for the return of money. Relations between historically close friends Pakistan and Saudi Arabia suffered stress this year. As Foreign Minister Shah Mehmood Qureshi, in an unusually sharp warning, asked Saudi Arabia led Organisation of Islamic Cooperation (OIC) to stop delay on the gathering of a meeting of its Council of Foreign Ministers (CFM) on Kashmir.
SAUDI ARABIA’s LOAN
Army Chief Gen Qamar Javed Bajwa later visited Riyadh in August to ease the tensions. Moreover, Gen Bajwa also met the Saudi ambassador in Islamabad.
With the $1 billion flowing out, Pakistan could face Balance of Payments issue after clearing the next Saudi installment. As Pakistan has $13.3 billion in State Bank foreign reserves.
“China has come to our rescue,” a foreign ministry official said.
A finance ministry official said the State Bank Of Pakistan was already in talks with Chinese commercial banks.
“We’ve sent $1 billion to Saudi Arabia,” he said. Another $1 billion will be repaid to Riyadh next month, he said. Islamabad had returned $1 billion in July.
Although a $1.2 billion surplus in the current account balance and a record $11.77 billion in remittances in the past five months have helped support the economy.However, having to return the Saudi money is still a setback.
Saudi Arabia gave Pakistan a $3 billion loan and a $3.2 billion oil credit facility in late 2018. After Islamabad sought Riyadh’s support over human rights violations by India in occupied Kashmir. Correspondingly, Saudi Arabia has pushed Pakistan to repay the loan.
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