China bails out debt-ridden Pakistan, sanctions $1.5 billion loan for Saudi Arabia debt
14 December, 2020 | Ojasvi Chauhan
China has bailed out debt-ridden Pakistan by providing it with financing line of $1.5 billion to repay the $2 billion Saudi Arabia debt. Sources noted that this time, both China and Pakistan have a...
Sources suggest that China has once again bailed out Pakistan by agreeing to give $1.5 billion to Pakistan to repay $2 billion Saudi Arabia debt. As per the reports, sources in Pakistan’s finance ministry and State Bank of Pakistan (SBP) said that Pakistan will soon repay $1 billion to Saudi Arabia and the remaining $1 billion will be paid in the month of January.
Pakistan’s all-weather ally China has not bailed out Pakistan for the first time. However, China has neither given it the loan from its SAFE (State Administration of Foreign Exchange) deposits this time and nor has it given out a commercial loan to Pakistan.
Sources noted that this time, both China and Pakistan have agreed to increase the size of a 2011 bilateral Currency-Swap Agreement (CSA) by an extra 10 billion Chinse Yuan or around $1.5 billion.
Pakistan is going through a financial crunch and is in a major debt crisis. Earlier in the month of November, Pakistan sought a $2.7 billion loan from China to construct package-I of Mainline-1 project of CPEC (China Pakistan Economic Corridor). China has become Pakistan’s biggest creditor over the past few years as the trade facility between the two countries has only been used to pay debts.