Pakistan returned $1 billion out of a $3 billion loan to the Saudi kingdom, four months in advance to when its actual repayment was due. This loan was extended as a provision worth of oil, a year and a half ago. Pakistan’s Foreign Minister Shah Mehmood Qureshi told that the decision for repaying in advance was taken keeping in mind that the Saudi kingdom was facing economic issues as oil-prices have significantly dropped. SBP and the Ministry of Finance confirmed that China extended an equal amount in loan to Pakistan to make up for any adverse impact there might occur as a result of the partial withdrawal of the Saudi lifeline. FM Shah Mehmood Qureshi thanked Saudi Crown Prince Mohammed Bin Salman as he prematurely returned $1 billion for the help it extended when Pakistan was facing a financial crunch. Knowing now that the same pressure befalls Saudi Arabia, he also said that Pakistan stands by it in this hour of need.
Imran Khan-led government started off with a prompt to fill a $12 billion hole left by the preceding government. In October 2018, a financial package worth $6.2 billion was agreed on by Saudi Arabia as a loan for three fiscal years to Pakistan. Where an annual gas and oil supply worth of $3.2 billion was included and the rest of the $3 billion was provided as cash assistance. But later, Saudi reduced the whole amount to $2 billion and sources also report that Pakistan has not been receiving oil as otherwise due through the loan agreement since May. This underscored testing relations between the two brotherly states.
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Pakistan is facing an additional challenging situation as the IMF program also remains temporarily suspended for the past five months. IMF also stated, “Bilateral creditors have maintained their exposure in line with debt sustainability objectives of the IMF program.” Sources suggest that Pakistan may also return $2 billion in cash assistance if China extends a similar loan facility. Javed Chaudhry, anchorperson (Express-News) highlighted Saudi Arab’s decision of withdrawing financial assistance at a time when Pakistan was seemingly changing its political map as a sign of lack of willingness to cooperate as a brotherly Islamic country.
As communicated by Sajid Qazi, spokesperson of the Petroleum Division, Pakistan could have utilized $770 million worth of oil and gas loan cash but the low demand nowadays has impacted the facility. This oil-credit was a part of a $14.5 billion package agreed on by three countries: Pakistan, UAE, and China. Although various sources believe the reduction in the loan amount and the premature repayment might mark external lobbying, but contrary sources persist on debt repayment being a sustainable step towards debt policies.
Sources:
https://www.thenews.com.pk/print/697841-pakistan-returns-1-bn-to-riyadh
https://tribune.com.pk/story/2258238/pakistan-pays-back-1b-saudi-loan
https://www.aboutpakistan.com/news/pakistan-pay-back-1-billion-saudi-loan/
