Pakistan
Amid better relations, Saudi Arabia and UAE maintain financial support worth $2b to Pakistan
Saudi Arabia and the United Arab Emirates (UAE) have retained loans worth $2 billion for Pakistan. Both the loans matured in last week of January. The extended facility that matured last month signals improved relations between Pakistan and the two key Gulf states.
The kingdom had earlier withdrawn $2 billion out of $3 billion loans that it had extended in late 2018. Pakistan’s foreign minister then said that the loans were withdrawn due to a fall in crude oil prices. While reports also stated that the UAE has rolled over $1 billion deposit for another year. The extension in the loan facility is to help Islamabad avoid default on international debt repayments.
Pakistan had obtained $6.2 billion financial support package from Riyadh in October 2018 and another $6.2 billion had been agreed by the UAE. However, the UAE only disbursed $2 billion.
Pakistan has not been making debt repayments to Saudi Arabia after the kingdom confirmed in July last year to suspend the bilateral official credit under the G-20 scheme. It is yet to see that whether Saudi Arabia would also refresh the $3.2 billion deferred oil financing facility that the Kingdom had withdrawn in May last year.
State bank’s gross foreign exchange reserves of around $13 billion remain fragile, as these are basically built by taking loans.
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