China bails out Pakistan to repay $1bn Saudi debt

Pakistan will repay $2 billion loan to the Kingdom of Saudi Arabia (KSA) as per the repayment schedule.

According to the people familiar with the matter, Pakistan is set to return $1 billion to Saudi Arabia in the current month, while the remaining $1 billion would likely be paid next year.

Pakistan has arranged loans from alternate sources for repayment of Saudi loans, people with knowledge on the matter, said.

Pakistan will immediately borrow $1.5 billion from China, while the country will issue Eurobonds within the next few weeks, which will likely generate around $700 million, sources added.

In October 2018, Saudi Arabia had agreed to provide $6.2 billion worth of financial package to Pakistan for three years. This included $3 billion in cash assistance to address Pakistan’s balance of payment issue and $3.2 billion worth of oil on deferred payments.

Pakistan has already paid back $1 billion to Saudi Arabia in May this year out of the $3 billion financing.