Pakistan repays $1b Saudi debt

• China provided Pakistan a $1b commercial loan to repay the Saudi debt
• Third tranche of Saudi loan to be repaid in January, 2021
• Saudi Arabia gave Pakistan a $3 billion loan and a $3.2 billion oil credit facility in late 2018

ISLAMABAD:  Pakistan has returned another  $1 billion  of the $3 billion loan given by the Kingdom of Saudi Arabia. 

The development came after China agreed to provide a $1 billion financing line to Pakistan - rescuing  Islamabad for the second time. Earlier this year, Pakistan repaid $1 billion to KSA in the first quarter of the current fiscal year with China's help.

 With the latest repayment, Pakistan has so far repaid $2 billion out of the total $3 billion debt. 

In late 2018, Saudi Arabia had given Pakistan a $3 billion loan and a $3.2 billion oil credit facility. The money had been deposited in State Bank of Pakistan on December 15 2018 with a three years maturity period. Islamabad is repaying the amount ahead of schedule.

The last tranche of $1 billion will be repaid next month.

With the new facility, Pakistan's reliance on China increases. The country's financial account has already turned negative to the tune of $1.33 billion because of an outflow of dollars.

So far, increased remittances helped Islamabad avoid an eruption of a full fledged balance of payments crisis as remittances from abroad remained over $2 billion in the last five months.