Since May, the kingdom of Saudi Arabia has stopped supply of oil to Pakistan after it failed to make payments of USD 3.2 billion.
In November 2018, when Prime Minister Imran Khan was playing driver to the Saudi Crown Prince Mohammad Bin Salman, a 3.2 billion dollers oil facility which is part of 6.2-billion dollers Saudi Arabian package to ease Pakistan’s external sector woes was signed.
The agreement had expired in May and Pakistan has been trying to renew the facility while awaiting a response from the Saudi government.
Pakistan is in the midst of a serious economic crisis amid the Wuhan virus pandemic and its IMF programme also remains technically suspended for the last five months.
With the Saudis asking for the payment of the loan of the oil facility, it will put a serious strain on the reserves of the central bank, built purely by taking loans.
Pakistan has already returned 1 billion dollars to the Saudis, four months ahead of its repayment period.
It was believed that Pakistan was under the impression that Saudi Arabia will not ask for the money back. and got a rude awakening when the money was asked to be repaid.
China, in its bid to help Pakistan has given $ 1 billion dollars which Pakistan will now be using to pay its bills to Saudi.