Pakistan set to pay back $1 bn to Saudi Arabia this week

ISLAMABAD: Pakistan is all set to pay back another $1 billion to Saudi Arabia during this week. Meanwhile, Beijing has agreed to extend $1 to $1.5 billion to compensate for bridging this gap.

Top official sources confirmed to The News on Sunday that Pakistan was going to pay back $1 billion in shape of SAFE deposit to Kingdom of Saudi Arabia tomorrow (Tuesday).

Islamabad had obtained confirmation about Saudis SAFE deposit on December 14 for a period of three years and the State Bank of Pakistan (SBP) received $1 billion on December 15, so tomorrow this money would be paid back ahead of the three years maturity period.

Saudi Arabia will get back the last tranche of $1 billion next month (January 2021). When contacted, official spokesman for the Ministry of Finance replied, “These are bilateral confidential matters.” No one from the Ministry of Finance was ready to talk more on this issue.

However, other top officials who got involved in these crucial issues told this correspondent that this financing arrangement was part of the International Monetary Fund (IMF) programme and the IMF had sought written and verbal guarantees that these bilateral financing arrangements would be rolled over during the Fund programme period.

The IMF official Ernesto had sought written and verbal guarantees before finalising the IMF programme and he had flown to China to get endorsement of Chinese authorities for making it part of financing plan at time of signing of the IMF agreement.

In the first quarter (July-Sept) period of the current fiscal year, Pakistan had returned $1 billion to KSA and with paying back the second instalment, Islamabad would be paying back $2 billion out of total $3 billion. The last tranche of $1 billion would be returned to KSA next month. Islamabad had paid mark up of over 3 percent on SAFE deposit.

With a new facility of $1.5 billion from Chinese side, the reliance on Chinese will be increased further. Earlier, China had provided a $1 billion deposit when Saudi Arabia got back its first instalment of $1 billion a few months ago.

Pakistan’s financial account had already turned negative of $1.33 billion because of outflow of dollars. So far, increased remittances helped Islamabad to avoid an eruption of full fledged balance of payment (BoP) crisis as remittances from abroad remained over $2 billion over the last consecutive five months.