China Helps Pakistan Pay Back $1 Billion Saudi Loan


Now Reading: China Helps Pakistan Pay Back $1 Billion Saudi Loan

Pakistan’s time-tested friend China has once again come to its aid as it helps the country pay back a one billion dollars Saudi loan. As the need arose, China came forward and granted a loan of $1 billion to Pakistan. With this aid, the country has managed to pay back Saudi Arabia $1 billion out of a $3 billion loan that it had secured one and a half year ago. Sources say that this was done in order to avoid default on international debt obligations after the Saudi authorities decided to reduce its financial support to Pakistan.

Way back in October 2018, Saudi Arabia had agreed to give a financial package of 6.2 billion dollars to Pakistan for three years. This package then included $3 billion in cash assistance and another $3.2 billion worth in an annual oil and gas supply. According to the agreement done between the two nations in the package, the assistance provided by Saudi Arabia was for one year. The Saudi authorities kept the option to roll over the amount at the end of the year for a period of three years. An interest of 3.2 percent was being paid by Pakistan on the $3 billion loan.


Pakistan had received the first tranche of $1 billion in November 2018. Following this, the second $1 billion was received in December 2018 and the third $1 billion in January 2019. In April of this year, the International Monetary released a report in which it was stated; “Saudi Arabia also refinanced $3-billion BOP (balance of payments) support loans that matured in November (2019)-January (2020).” However, being asked to repay the $1 billion loan within just six months of its renewal came as a major surprise to the government.

China Comes To The Rescue

The Ministry of Finance and the State Bank of Pakistan (SBP)’s close sources have said as this happened, China immediately came forward and extended $1 billion in loan to help Islamabad. This resulted in aiding it to avoid any adverse impact of the Saudi lifeline’s partial withdrawal.


This surprising development just came one day after the Executive Committee of the National Economic Council (Ecnec) had approved the Mainline-1 railway project of the China Pakistan Economic Corridor (CPEC) which was worth $6.8 billion. 90% of this will be financed by China. Under the project, the existing 2,655 km railway tracks in Pakistan will be upgraded to allow trains to move up to 165 km per hour. This will serve to double the speed of the capacity of the current railway network. Not only that, it will increase the line capacity from 34 to over 150 trains each way per day.

Not only this, but China has previously already swore over $60 billion in various infrastructure projects in Pakistan, as part of the multi-billion-dollar China-Pakistan Economic Corridor (CPEC) agreement. Now with this $1 billion loan, China has once again shown proof of its time-tested friendship with Pakistan.

What are your thoughts on this development? Tell us in the comments below!


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