ISLAMABAD:
China has again bailed out Pakistan as it agrees to immediately provide$1.5 billion financing line to repay the $2 billion Saudi Arabia debt,sources told The Express Tribune.
Out of $2 billion, Pakistan is now set to return the $1 billion on comingMonday, said the sources in the finance ministry and the State Bank ofPakistan (SBP). The remaining $1 billion is due in January, they added.
However, this time around, China has not given the loan from its StateAdministration of Foreign Exchange, commonly known as SAFE deposits, norhas it extended a commercial loan, said the sources.
Instead, both the countries have agreed to augment the size of a 2011bilateral Currency-Swap Agreement (CSA) by an additional 10 billion ChinseYuan or around $1.5 billion, the sources said. This has increased the sizeof the overall trade facility to 20 billion Chinese Yuan or $4.5 billion.
The CSA is a Chinese trade finance facility that Pakistan has been usingsince 2011 to repay foreign debt and keep its gross foreign currencyreserves at comfortable levels instead for trade related purposes.
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The benefit of this arrangement will be that the additional $1.5 billionChinese loan will not reflect on the book of the federal government and itwill not be treated as part of Pakistan’s external public debt.
Spokespersons for both the SBP and the finance ministry neither denied norconfirmed the development. The spokesperson for the central bank ducked thequestions while the ministry of finance said that it was a “bilateralconfidential matter”.
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