Pakistan returns $1b of Saudi Arabia's soft loan, say officials

Pakistan has returned $1 billion to Saudi Arabia as a second installment of a $3 billion soft loan, as Islamabad reaches out to Beijing for a commercial loan to help it to repay another $1 billion to Riyadh next month, officials said on Wednesday.

With the $1 billion flowing out, Pakistan — which has $13.3 billion in central bank foreign reserves —could face a balance of payments issue after clearing the next Saudi installment.

"China has come to our rescue," a foreign ministry official said.

A finance ministry official said Pakistan's central bank was already in talks with Chinese commercial banks.

"We've sent $1 billion to Saudi Arabia," he said. Another $1 billion will be repaid to Riyadh next month, he said. Islamabad had returned $1 billion in July.

Although a $1.2 billion surplus in its current account balance and a record $11.77 billion in remittances in the past five months have helped support the Pakistani economy, having to return the Saudi money is still a setback.

Saudi Arabia gave Pakistan a $3 billion loan and a $3.2 billion oil credit facility in late 2018.

Reuters