Islamabad: Pakistan has paid back Saudi Arabia USD 1 billion out of its total USD 3 billion loan, after the latter decided to reduce its financial support for the country on August 6. Pakistan paid back the loan by utilizing a separate USD 1 billion loan extended by China in order to avoid any issues with its foreign exchange reserves.
Pakistan had to juggle its loans this way in order to avoid defaulting on international obligations. Previously, Saudi Arabia had provided USD 6.2 billion worth of financial assistance to Pakistan in October 2018. Of this, USD 3 billion was in cash, while USD 3.2 billion assistance was in the form of annual oil and gas supplies on deferred payments.
Unlike the Saudi loan, which had been taken on the books of the State Bank of Pakistan, the loan from China has been taken on the books of the federal government, as per the conditions set by the International Monetary Fund (IMF) package.