Pakistan returns $1 billion of Saudi Arabia's soft loan, officials say

Published December 16, 2020
Prime Minister Imran Khan in conversation with Saudi Crown Prince Mohammed bin Salman during the premier's trip to Riyadh in October 2018. — Online/File
Prime Minister Imran Khan in conversation with Saudi Crown Prince Mohammed bin Salman during the premier's trip to Riyadh in October 2018. — Online/File

Pakistan has returned $1 billion to Saudi Arabia as the second instalment of a $3 billion soft loan, as Islamabad reaches out to Beijing for a commercial loan to 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 a strain earlier this year when 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.

Army Chief Gen Qamar Javed Bajwa subsequently visited Riyadh in August to ease the tensions. Gen Bajwa also met the Saudi ambassador in Islamabad on Tuesday.

With the $1 billion flowing out, Pakistan — which has $13.3 billion in State Bank foreign reserves — could face a balance of payments issue after clearing the next Saudi instalment.

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

A finance ministry official said the SBP 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, 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, Saudi Arabia has pushed Pakistan to repay the loan.

The People's Bank of China did not respond to a Reuters request for comment, and Riyadh didn't issue any details.

Opinion

Capacity for cruelty
04 Aug 2021

Capacity for cruelty

Those who believe in the human capacity to eschew cruelty are believed to be stupid and naïve.
Education crisis
Updated 04 Aug 2021

Education crisis

It is imperative to avoid measures that could further dent an already weak and vulnerable school system.
Off the planet
04 Aug 2021

Off the planet

Billionaires are yet to match the accomplishments of 60 years ago.
Films and reality
03 Aug 2021

Films and reality

It is hard to remember if films ever glamorised the relationship between first cousins.

Editorial

PML-N’s dilemma
Updated 04 Aug 2021

PML-N’s dilemma

The road ahead for the PML-N is going to be long and bumpy no matter which narrative it follows.
04 Aug 2021

Attacks on cops

AMIDST cautious optimism that Pakistan may be finally beginning to achieve success in bringing the number of polio...
04 Aug 2021

Myanmar about-face

SIX months into the coup that sent Myanmar’s hybrid civ-mil government packing, the generals have made their...
03 Aug 2021

Changing GB’s status

THE government’s plans to accord a provisional provincial status to Gilgit-Baltistan are progressing steadily and...
Taliban assault
03 Aug 2021

Taliban assault

Intra-Afghan peace talks should be promoted, but the global community must be ready for the imminent collapse of the Afghan state.
03 Aug 2021

Cancelling Aurat March

THE cancellation of Aurat March Faisalabad is exactly one of those ‘isolated incidents’ which, when viewed...