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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.

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Amid better relations, Saudi Arabia and UAE maintain financial support worth $2b to Pakistan
GNN Media: Representational Photo

The kingdom had earlier withdrawn $2 billion out of $3 billion loans that it had extended in late 2018. Pakistan’s foreign minister then said that the loans were withdrawn due to a fall in crude oil prices.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see that whether Saudi Arabia would also refresh the $3.2 billion deferred oil financing facility that the Kingdom had withdrawn in May last year.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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