Pakistan in debt will receive $ 3 billion from Saudi Arabia; in the central bank deposit for 1 year
Cash-strapped Pakistan heaved a sigh of relief on Saturday after the cabinet led by Imran Khan approved a deal that would pave the way for a $ 3 billion loan from Saudi Arabia. The Saudi government previously pledged to maintain a $ 3 billion reserve at the State Bank of Pakistan (SBP), Geo News reported. With the approval of the deal by the Federal Cabinet, the aid will be dispatched from Saudi Arabia in the coming days and will remain in the SBP’s deposit account for one year.
“The SBP has finalized all the arrangements and now everything is in place and the agreed deposit amount will be received in the next few days,” official sources told The News.
Saudi Arabia’s $ 3 billion loan isn’t everything. According to Muzammil Aslam, spokesperson for the prime minister’s finance adviser, Pakistan expects $ 7 billion over the next 60 days. These include $ 3 billion in deposits from Saudi Arabia, a $ 1.2 billion Saudi oil facility with deferred payments, an $ 800 million oil facility from the Islamic Bank. development, $ 1 billion raised through the issuance of Sukuk bonds and $ 1 billion from the International Monetary Fund (IMF).
Pakistani debt crisis deepens
The Pakistani economy is crippled by its growing debts and loans from international organizations and friendly countries. In March 2021, the World Bank signed agreements with Islamabad for a $ 1.336 billion loan, just days after the International Monetary Fund (IMF) agreed to release a $ 500 million loan tranche.
In addition to global organizations, Pakistan also borrows regularly from the United Arab Emirates (UAE), which earlier this year demanded repayment of $ 1 billion from the debt-ridden economy. Pakistan last year managed to repay part of a loan guaranteed by Saudi Arabia after its all-time friend – China – came to Imran Khan’s rescue. A report from Pakistan’s finance ministry revealed that Saudi Arabia had provided the neighboring country with a financial package of $ 6.2 billion for three years in 2018, which Saudi Arabia claimed “ahead” of its schedule. Pakistan had repaid the loan to Saudi Arabia after taking out a loan of the same amount from China.
Its regular borrowing from China has, in turn, boosted its account. According to the annual financial statement released by the State Bank of Pakistan (SBP), Pakistan had to pay more than Rs 26 billion in interest to China to repay debt maturing in fiscal year 2020 -2021. Apparently, the cash-strapped nation is also facing dozens of “hidden debts” totaling $ 385 billion as a result of China’s Belt and Road Project (BRI).