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Pakistan may return $2 billion Saudi Arabia loan: Report

IANS/Islamabad
Filed on November 7, 2020

(Reuters file)

Saudi Arabia's assistance package had helped Imran Khan's government to avoid looming default.

Pakistan might return the $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, a media report said on Saturday.

Ministry of Finance sources told The Express Tribune that the second tranche of $1 billion of Saudi loan is maturing next month and there was a likelihood that the government will return the money two years after it was borrowed.

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."It is a bilateral confidential matter," said the Ministry of Finance in a terse response on Friday.

But a top government official said on condition of anonymity that there is a possibility that Pakistan will be returning the money next month. After coming into power, the Prime Minister made two trips to Saudi Arabia to secure the package, which allowed the PTI government to negotiate a deal with the International Monetary Fund (IMF).

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. The sources told The Express Tribune that the government was considering various options to repay the Saudi loan, which is booked on the balance sheet of the State Bank of Pakistan.

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.





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