Pakistan receives ‘1.5 billion dollars’ loan from China to repay the debt to Saudi Arabia!!!

As per the reports, China has approved to instantly give a $1.5 billion financing line to Pakistan to support the country to reimburse the $2 billion Saudi Arabia deficit. Pakistan will repay the $1 billion on Monday and the remaining $1 billion in January. Sources stated that around this time China has not repaid the loan from its State Administration of Foreign Exchange, generally known as SAFE deposits, nor has it flared a commercial loan.

Instead, China is supplying the $1.5 billion loan by increasing the extent of the 2011 bilateral Currency-Swap Agreement (CSA), by an extra 10 billion Chinese Yuan or around $1.5 billion, the information in The Express Tribune said. This has boosted the size of the prevailing trade aptitude to 20 billion Chinese Yuan or $4.5 billion.

In December 2011, the bilateral Currency Swap Agreement was signed between the State Bank of Pakistan (SBP) and the Peoples Bank of China (PBOC) “to stimulate bilateral commerce, finance direct investment, and provide short-term liquidity support”, according to the central bank. The actual agreement was revived in December 2014 for a term of three years with a general limit of 10 billion yuan or $1.5 billion. It was again expanded in May 2018 for a term of three more years. This time the amount was inflated to 20 billion Yuan or $3 billion.

This deal is likely to lapse in May next year, SBP has determined to bid China to additionally rise it for three more years, reports said.CSA is a fundamentally a Chinese trade finance facility that Pakistan has been utilizing since 2011 to compensate foreign deficit and keep its gross foreign currency aids at livable levels rather for trade-related objectives.

Under this deal, the extra $1.5 billion Chinese loans will not glance on the book of the federal government and it will not have ministered as part of Pakistan’s external public deficit. Spokespersons for the State Bank of Pakistan (SBP) and Pakistan’s finance ministry neither rejected nor approved the reports. However, the spokesperson for the central bank, escaped the questions while the ministry of finance stated that it was a “bilateral confidential matter”.