China gives Pakistan $1.5 billion loan to repay $2 billion Saudi Arabia debt
China has agreed to immediately provide $1.5 billion financing line to Pakistan to help the country repay a $2 billion Saudi Arabia debt, according to India Today.
Out of the $2 billion, Pakistan will reportedly return $1 billion today and the remaining $1 billion in January, the report said.
Sources, however, said that this time around, China has not given the loan from its State Administration of Foreign Exchange, commonly known as SAFE deposits, nor has it extended a commercial loan, the India Today report said.
Instead, this time, China is providing the $1.5 billion loan by augmenting the size of 2011 bilateral Currency-Swap Agreement (CSA), by an additional 10 billion Chinse Yuan or around $1.5 billion, India Today quoted The Express Tribune. This has increased the size of the overall trade facility to 20 billion Chinese Yuan or $4.5 billion.
CSA is a Chinese trade finance facility that Pakistan has been using since 2011 in order to repay foreign debt and keep its gross foreign currency reserves at comfortable levels instead for trade-related purposes, according to the news magazine.
Under this agreement, the additional $1.5 billion Chinese loan will reportedly not reflect on the book of the federal government and it will not be treated as part of Pakistan's external public debt.
Spokespersons for State Bank of Pakistan (SBP) and Pakistan's finance ministry neither denied nor confirmed the reports. The spokesperson for the central bank, however, evaded the questions while the ministry of finance said that it was a "bilateral confidential matter".
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