China relieved urgent debt stress of his friend Pakistan by lending billions to repay Saudi Arabia. The economy of Pakistan is currently in intensive care.How can a country like Pakistan – with negative GDP have the ability to pay back over US$ 1 billion per month?
Coronavirus has been indicated as a very catastrophic pandemic for every country from past one year which pushed everyone into an ultra-critical economic crisis. And now, this has given a red signal for the Pakistan’s ongoing financial crisis. To repay the loan of $1 billion to Saudi Arabia, China has once again bailed out Pakistan by agreeing to give $1.5 billion to Pakistan. 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 by January, next year.
However, it has been said by the sources that this time China has neither used its SAFE (State Administration Foreign Exchange) deposits nor has given out a commercial loan to Pakistan. Instead, this time both the China and Pakistan have agreed to increase the 2011 bilateral currency swap agreement (CSA) by an extra billion Chinese Yuan or around $1.5billion.
As time passes, Pakistan is getting deep into the swamp ofdestitution by overloading itself with number of loans from different countries and big institutions. Earlier in November, it was reported that Pakistan has decided to seek USD 3 billion trade from China for the construction of package-1 of the Mainline Project of China Pakistan Economic Corridor (CPEC).
Pakistan paid Pakistani Rs 20.5 billion in interest to China on using the $3 billion trade finance facility in the last fiscal year alone, showed the central bank’s financial statement.The trade facility, originally meant to promote bilateral trade in respective local currencies, has been used for paying foreign debt.