Pakistan paid back $1 billion out of a $3 billion loan that it secured from Saudi Arabia one and a half years ago when Imran Khan assumed the office of Prime Minister.
According to the Pakistani Ministry of Finance and the State Bank of Pakistan (SBP), Pakistan returned the $1 billion loan to Saudi Arabia from a total of $3 billion that it secured to avoid default on international debt obligations. The $1 billion loan paid was borrowed from China.
Sources in the Ministry of Finance and the State Bank of Pakistan (SBP) told that China immediately came forward to help Pakistan and extended 1 billion dollars of loan to help Islamabad avoid any adverse impact of the partial withdrawal of the Saudi lifeline.
Saudi Arabia agreed to offer a lifeline of $6.2 billion in October 2018. That package was worth of financial package to Pakistan for three years. It comprised of $3 billion of cash assistance and $3.2 billion worth of yearly oil and gas supply on delayed payment.
According to the agreement, the offer was given to Pakistan, the Saudi cash and oil facility was for one year with an option to roll over the amount at the end of the year. This package was provided for three years only. However, according to the information that the Ministry of Finance shared with the National Assembly, Pakistan was forfeiting 3.2 percent of interest on a 3 billion dollar facility.
According to the IMF’s April report, “Debt sustainability is supported by the agreed rollover of maturing obligations by key bilateral creditors (China, Saudi Arabia, and the UAE), as demonstrated by the established track record over the past nine months,”
Moreover, all these countries have already independently assured the IMF that Pakistan will not be withdrawn from financial support, told sources in the Ministry of Finance. According to the IMF, the rollover of these loans is critical to lessen the gross financing needs by the fiscal year 2025 to 19.5 percent GDP.