Pakistan may return $2b Saudi Arabian loan
ISLAMABAD:Pakistan may return $2 billion Saudi Arabian loan and is looking for various options to secure more lending aimed at retaining gross official foreign exchange reserves at their current level of over $12 billion, Ministry of Finance sources told The Express Tribune.
The second tranche of $1 billion of Saudi loan is maturing next month and there is likelihood that the government will return the money – two years after the borrowings, the sources added.
The Saudi Arabian financial assistance package, originally estimated at $6.2 billion, had helped the government of Prime Minister Imran Khan to avoid looming default on international debt obligations.
Although there was hope that the political level contacts may help to convince the Gulf countries to extend these loans for another year, the chances were not high, said the Finance Ministry sources.
Saudi Arabia had agreed to provide $6.2 billion worth of financial package to Pakistan for three years. This included $3 billion in cash assistance and $3.2 billion worth of annual oil and gas supply on deferred payments.
As per the agreement, the Saudi cash and oil facility was for one year with an option to roll over the amount at the end of the year for a period of three years.
Pakistan was paying 3.2% interest on the $3-billion facility, according to the information that the Ministry of Finance shared with the National Assembly. The Saudi oil facility has already been suspended while Pakistan has also paid back Saudi Arabia $1 billion out of the $3 billion in May this year.
The sources said the government was considering various options to repay the Saudi loan, which is booked on the balance sheet of the State Bank of Pakistan.
A senior Finance Ministry official said that Pakistan could get $2 billion from China, like it did last time when it paid back $1 billion to Saudi Arabia. The official did not explain whether the Chinese lending will be concessional or the commercial loans.
The government has also not been able to get the suspended $6 billion IMF programme restored, which is making it difficult for it to continue uninterrupted foreign inflows. The sources said if the IMF programme is not restored in near future, the World Bank inflows may start drying up.
The programme loans from the other two multilateral creditors were also critical to return $10.6 billion in maturing loans in the current fiscal year, excluding the Saudi Arabian and UAE debt. Pakistan’s gross official foreign currency reserves of about $12.2 billion are largely built by taking foreign loans.
after it was established they acted "over zealously" creating an "unwarranted situation" between the two state institutions, said the military's media wing on Tuesday.
