Featured Pakistan may return $2b Saudi Arabian loan

[YeBeWarned]

 

[GHALIB]

Pakistan may return $2b Saudi Arabian loan
Country weighs options to secure more lending to maintain $12 billion foreign exchange reserves

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.

“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.

The Express Tribune sent questions to the Ministry of Finance on Tuesday. The finance ministry had been requested to comment on whether Pakistan will payback $1 billion to Saudi Arabia next month and whether it will also return a $2 billion loan to the United Arab Emirates (UAE).

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.

After coming into power, Prime Minister Imran Khan had twice flown to Saudi Arabia to secure the package, which provided space to the first-timer 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.

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.
Chinese authorities have privately expressed reservations over slow progress on the China Pakistan Economic Corridor (CPEC) but they are likely to bail out Islamabad due to the strategic nature of the relations, said the sources.

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 IMF is not bending on two conditions of introducing a mini-budget and increasing electricity tariffs, which has complicated matters for Prime Minister Imran Khan whose government is already facing criticism for constantly high inflation.

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.

Pakistan has also utilized a $3 billion Chinese trade financing facility to cushion its reserves. The $3 billion facility is also expiring in May next year, which Pakistan has decided to request China to rollover.

As of September this year, the central bank has also borrowed $5.8 billion from commercial banks under the forward and currency swap arrangements, according to the SBP data.

Just six months ago, in February 2020 when Pakistan was implementing the IMF loan programme, the SBP’s borrowing under the swap and future contracts was $2.9 billion, including $1.6 billion in long-term contracts.

After excluding all short term liabilities, the central bank’s reserves are negative by about $10 billion.

Pakistan may return $2b Saudi Arabian loan | The Express Tribune

Country weighs options to secure more lending to maintain $12 billion foreign exchange reserves

tribune.com.pk

any self respecting country will return the qarza given by friendly country.

 

[HAIDER]

Too much pressure to return money .... lolzz

 

[Imran Khan]

wish we return every loan one day and became debt free country

 

[GHALIB]

Saudi Arabia is one lucky country.

with help by dost china .

 

[HAIDER]

wish we return every loan one day and became debt free country

 

[GHALIB]

wish we return every loan one day and became debt free country

you are right.

 

[HAIDER]

with help by dost china .

 

[Microsoft]

Pakistan should throw their money to their face and cast its lot with Erdogan of Turkey. Stop treading on two boats. Imran khan should just make foreign policy change and align with new emerging order involving Turkey, Iran and China.

This is what should be done but MBS threatens to send back all Pakistani workers from KSA.

 

[alibaz]

Saudi Arabia is one lucky country.

Dear all loans are to be returned, maximum favour could be rescheduling, no one rights off without any interest. We are thankful to them for their help in difficult time, the first billion which we returned with interest was managed through a cheaper loan from china. Lets see how these two billions will be returned and managed.

 

[El Sidd]

Dear all loans are to be returned, maximum favour could be rescheduling, no one rights off without any interest. We are thankful to them for their help in difficult time, the first billion which we returned with interest was managed through a cheaper loan from china. Lets see how these two billions will be returned and managed.

There should be a better mechanism for this.

Some trade incentives should be provided to link them to Gwadar more financially.

 

[SuvarnaTeja]

Dear all loans are to be returned, maximum favour could be rescheduling, no one rights off without any interest. We are thankful to them for their help in difficult time, the first billion which we returned with interest was managed through a cheaper loan from china. Lets see how these two billions will be returned and managed.

Isn't interest haram as per Islam?

 

[airmarshal]

I hope and pray we come out of this constant looking for loans and be able to generate enough revenue to sustain ourselves. For this, the government is taking serious steps and I pray it succeeds.

 

[alibaz]

There should be a better mechanism for this.

Some trade incentives should be provided to link them to Gwadar more financially.

Agreed loan term expired and instead of roll over request from a friend who is feeling heat due to its own financial issues, Pakistan chose a cheaper loan from China to replenish this loan. I believe win win for everyone. Saudi's were interested in installing refinery by investing 20 Billion USD but somehow they seem to have lost interest, probably due to financial state or may have more interest somewhere else.
However, would just like to remind MBS of a story of an angry snake who entered into a carpenter's workshop and got injured by a saw.

 

[PakFactor]

Too much pressure to return money .... lolzz

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LOL. That’s brutal