*China has agreed to immediately provide Pakistan $1.5 billion financingline to repay the $2 billion Saudi Arabia debt.*

Sources in the finance ministry and the State Bank of Pakistan (SBP) told *TheExpress Tribune* that Pakistan is now set to return the $1 billion out of$2 billion. Pakistan has to pay the remaining $1 billion in January.

But, the neighbor has not given the loan from its State Administration ofForeign Exchange, nor has it extended a commercial loan.

Instead, the neighbors have agreed to augment the size of a 2011 bilateralCurrency-Swap Agreement (CSA). The CSA was reached between the SBP and thePeoples Bank of China (PBOC) in December 2011 in order to promote bilateraltrade, finance direct investment, and provide short-term liquidity support.

The additional $1.5 billion Chinese loans will not reflect on the book ofthe federal government and it will not be treated as part of Pakistan’sexternal public debt. When contacted, the Ministry of Finance said theseare bilateral confidential matters.

In August, Pakistan repaid $1 billion of the $3 billion loans taken fromSaudi Arabia. To offset the negative effects of Saudi Arabia’s decision tocut funding, China had stepped in to provide Pakistan $1bn loans.