Pakistan has repaid Saudi Arabia $1 billion of the $3 billion it owes the Arab state, in the second installment of the soft loan, while Islamabad is reaching out to Beijing for a commercial loan in order to offset the pressure mounting from having to repay another $1 billion to Saudi Arabia next month, government officials have revealed.
Pakistan presently has $13.3 billion in the State Bank’s foreign reserves, but with $1 billion going out of the country it could face a balance of payments problem once again.
A foreign ministry official, when speaking to new outlet Reuters, said that, “We’ve sent $1 billion to Saudi Arabia. Another $1 billion will be repaid to Riyadh next month”. Pakistan has already returned $1 billion to Saudi Arabia in July, this year.
The foreign ministry official also said, “China has come to our rescue”. He stated that the State Bank of Pakistan was already conducting talks with Chinese commercial banks regarding this issue.
Pakistan has a $1.2 billion surplus in its current account balance, and a record $11.77 billion in remittances in the past five months have helped support the economy, but having to repay the Saudis such substantial sums so quickly is still going to take a toll on the economy.
Pakistan received a $3 billion dollar loan and a $3.2 billion oil credit facility from Saudi Arabia, in 2018. However, after Foreign Minister Shah Mehmood Qureshi in an unusually sharp warning, asked Saudi Arabia-led Organisation of Islamic Cooperation (OIC) to stop dilly-dallying on the convening of a meeting of its Council of Foreign Ministers (CFM) on Kashmir, the relationship between the previously close countries became strained. Since then Riyadh has pushed Pakistan to repay its loan as soon as possible.