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

Educating merged districts
Updated 12 Apr 2021

Educating merged districts

The seven merged districts of KP, with a combined population of over five million, do not have a single university.
Greater visibility
12 Apr 2021

Greater visibility

It is not surprising that the custodians of patriarchy are fearful.
Rethinking executions
11 Apr 2021

Rethinking executions

One convict’s fight to escape the gallows exposes the deep flaws in our criminal justice system.

Editorial

Pakistan-India peace
Updated 12 Apr 2021

Pakistan-India peace

Experts note that everything — including Kashmir — can be resolved if there is a will in both capitals.
12 Apr 2021

Child abuse

IN its annual report, the NGO Sahil found that there has been a 4pc increase in documented cases of major crimes...
12 Apr 2021

New tax chief’s task

THE FBR got a new chairman on Friday. Asim Ahmed, a senior IRS officer who was serving as the Board’s IT member...
11 Apr 2021

Dissension within PTI

WITH the dust from the PDM’s implosion still not fully settled, the PTI is now faced with growing dissension from...
11 Apr 2021

Power to arrest

A SUPREME Court verdict announced on Thursday spelled out what might be considered a self-evident truth in any...
11 Apr 2021

Unequal vaccine distribution

IT is in times of crisis that we often see the best — or worst — of humanity. In this regard, the pandemic has...