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Pakistan Considering Returning $2b Saudi Loan: Report

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Pakistan may decide to return the $2b loan of Saudi Arabia and look for other lenders for maintaining the gross foreign exchange reserves.

Even though ministry of finance has not disclosed the decision yet, a top government official has said that Pakistan may return the loan next month, Express Tribune reported on Monday.

After coming to power, Prime Minister Imran Khan went to Saudi Arabia twice to secure a financial package. Saudi Arabia agreed to grant Pakistan a loan of $6.2b with the supply of oil and gas on deferred payments.

Pakistan had already paid back $1b to Saudi Arabia with the interest of 3.2% in May this year while the oil facility had already been suspended.

The government was taking into account various options to repay this loan. According to an official, Pakistan may take $2b loan from China to maintain the foreign exchange reserves. The official added that even though Chinese authorities are not happy with the progress on China Pakistan Economic Corridor (CPEC), they will bail out Pakistan.

The government has not been able to secure the suspended $6b IMF program which has already started ringing the bells. If the program is not restored, the World Bank flows may dry up.

There is a deadlock between the government and IMF on two issues i.e the increase in tariffs of electricity and an introduction of mini budget.

 

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