Pakistan returns $ 1 billion in soft loan to Saudi Arabia, officials say

ISLAMABAD: Pakistan returned $ 1 billion to Saudi Arabia as the second installment of a $ 3 billion soft loan, while Islamabad turns to Beijing for a commercial loan to help offset pressure to repay another billion dollars in Riyadh next month, officials said Wednesday.

Analysts say it is unusual for Riyadh to press for the money back. But relations have been strained lately between Pakistan and Saudi Arabia, historically close friends.

With $ 1 billion in output, Pakistan – which has $ 13.3 billion in central bank foreign reserves – could face a balance of payments problem after clearing the next Saudi installment.

“China has come to our rescue,” a foreign ministry official told Reuters.

A finance ministry official said Pakistan’s central bank was already in talks with Chinese commercial banks.

“We have sent $ 1 billion to Saudi Arabia,” he said. Another billion dollars will be repaid in Riyadh next month, he said. Islamabad had returned $ 1 billion in July.

Although a $ 1.2 billion surplus in its current account balance and a record $ 11.77 billion in remittances over the past five months have helped support the Pakistani economy, having to return Saudi money is still a joke. arrest.

Saudi Arabia granted Pakistan a $ 3 billion loan and $ 3.2 billion oil credit line at the end of 2018. After Islamabad sought Riyadh’s support over Kashmir, Saudi Arabia has prompted Pakistan to repay the loan.

Pakistani army chief General Qamar Javed Bajwa, who visited Riyadh in August to ease tensions, met with the Saudi ambassador in Islamabad on Tuesday.

The People’s Bank of China did not respond to a Reuters request for comment and Riyadh did not release any details.

Washington has expressed concern about Pakistan and other developing countries stuck in the Chinese debt trap. He criticized Beijing’s China-Pakistan economic corridor plans, which involve more than $ 60 billion in promised support for infrastructure projects in Pakistan.