China once against bailed out Pakistan as it provides $2 billion to pay off Saudi debt
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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 coming Monday, said the sources in the finance ministry and the State Bank of Pakistan (SBP). The remaining $1 billion is due in January, they added.
However, 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, said the sources.
Instead, both the countries have agreed to augment the size of a 2011 bilateral Currency-Swap Agreement (CSA) by an additional 10 billion Chinse Yuan or around $1.5 billion, the sources said. This has increased the size of 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 using since 2011 to repay foreign debt and keep its gross foreign currency reserves at comfortable levels instead for trade related purposes.
The benefit of this arrangement will be that the additional $1.5 billion Chinese loan will 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 both the SBP and the finance ministry neither denied nor confirmed the development. The spokesperson for the central bank ducked the questions while the ministry of finance said that it was a “bilateral confidential matter”.
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