ISLAMABAD: Pakistan has returned $1 billion to Saudi Arabia as a second instalment of a $3bn soft loan, as Islamabad reaches out to Beijing for a commercial loan to help it offset pressure to repay another $1bn to Riyadh next month, officials said on Wednesday.

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

With the $1bn flowing out, Pakistan — which has $13.3bn in central 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.

Islamabad reaches out to Beijing for commercial loan to help it offset pressure to repay another $1bn to Riyadh next month

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 $1bn would be repaid to Riyadh next month, he added.

Islamabad had returned $1bn in July.

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

Saudi Arabia gave Pakistan a $3bn loan and a $3.2bn oil credit facility in late 2018.

Army Chief General Qamar Javed Bajwa, who visited Riyadh in August to ease the tensions, met the Saudi ambassador in Islamabad on Tuesday.

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

Washington has expressed concerns about Pakistan and other developing countries getting stuck in a Chinese debt trap. It has criticised Beijing’s China-Pakistan Economic Corridor plans involving more than $60bn in pledged support for infrastructure projects in Pakistan.

Published in Dawn, December 17th, 2020

Opinion

Editorial

Judiciary’s SOS
Updated 28 Mar, 2024

Judiciary’s SOS

The ball is now in CJP Isa’s court, and he will feel pressure to take action.
Data protection
28 Mar, 2024

Data protection

WHAT do we want? Data protection laws. When do we want them? Immediately. Without delay, if we are to prevent ...
Selling humans
28 Mar, 2024

Selling humans

HUMAN traders feed off economic distress; they peddle promises of a better life to the impoverished who, mired in...
New terror wave
Updated 27 Mar, 2024

New terror wave

The time has come for decisive government action against militancy.
Development costs
27 Mar, 2024

Development costs

A HEFTY escalation of 30pc in the cost of ongoing federal development schemes is one of the many decisions where the...
Aitchison controversy
Updated 27 Mar, 2024

Aitchison controversy

It is hoped that higher authorities realise that politics and nepotism have no place in schools.