Pakistan, which is in serious economic strife has again been bailed out by China as it has agreed to lend $1.5 billion financing line to repay the $2 billion debt to Saudi Arabia.
On Monday (December 14), Pakistan is set to return the $1 billion and remaining $1 billion is due in January.
However, it must be noted that the loan given by China is not from its State Administration of Foreign Exchange commonly known as SAFR deposits nor it has given a commercial loan to Islamabad but has agreed to increase the size of a 2011 bilateral Currency-Swap Agreement (CSA) by an additional 10 billion Chinese Yuan or around $1.5 billion.
The new line of credit must not be seen as an aid package but an arrangement that will provide additional $1.5 billion Chinese loans that will not be treated as part of Pakistan’s external public debt. However, experts have made it very clear that this new loan by China pushes Pakistan further into the debt trap under the China Pakistan Economic Corridor (CPEC).
Also, the relationship between Pakistan and its once benefactor Saudi Arabia has soured during the time of Prime Minister Imran Khan. Khan had visited Saudi Arabia twice to secure a loan which included $3 billion in cash assistance and $3.2 billion worth of annual oil and gas supply on deferred payments.
However, much to Pakistan’s dismay Saudi Arabia has claimed back its money ahead of the schedule. This has been further compounded by the growing closeness of India with Saudi Arabia and other oil-rich Gulf nations.