$1 billion loan out of the total $3 billion loan has been paid back by Pakistan to Saudi Arabia. The loan was secured one and a half year ago. Now $1b has been paid back to prevent default on the global debt obligation after Saudi Arabia decided to reduce its financial support.
China, at this difficult time has come to the aid of Pakistan and has given $1 billion in loan to help Pakistan avoid any negative impact of the partial withdrawal of the Saudi loan.
The Finance Ministry has not commented on this. It is pertinent to mention here that back in October 2018, Saudi Arabia decided to provide 6.2 billion worth of financial package to Pakistan for three years.
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This included $3 billion worth cash assistance and $3.2 billion worth of annual oil and gas supply on deferred payments. The agreement was that the Saudi cash and oil facility was for one year. There was an option to roll over the amount by the end of 2020 for a period of 3 years. Pakistan was paying back 3.2% in interest on the $3-billion facility.
The International Monetary Fund (IMF) back in its report in April stated, “Saudi Arabia also refinanced $3-billion BOP (balance of payments) support loans that matured in November (2019)-January (2020).”
Adding, “Bilateral creditors have maintained their exposure in line with debt sustainability objectives of the IMF programme.”