China bails out Pakistan, sanctions $1.5 billion loan for Saudi Arabia debt: Report

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China has sanctioned a $1.5 billion finance line to Pakistan for the country to repay a $2 billion debt owed to Saudi Arabia – half of which is due this Monday (December 14).

Pakistan will use the funding to repay $1 billion immediately on Monday, while the remaining $1 billion is due in January 2021, The Express Tribute reported from sources in the country’s finance ministry and State Bank of Pakistan.

This is not the first time China has bailed out Pakistan, but the loan this time has come by augmenting the size of 2011 bilateral Currency-Swap Agreement (CSA), the sources pointed out.

Moneycontrol could not independently verify the report.

Prior loans were extended through China’s State Administration of Foreign Exchange aka SAFE deposits or as commercial loan, they said. This time, however, an additional $1.5 billion (10 billion Chinese Yuan) has been added to the existing CSA trade facility – increasing its size to $4.5 billion (20 billion Chinese Yuan).

Pakistan Finance Ministry and SBP spokespersons did not confirm the news, as per the report.

A benefit of using the CSA for financing is that the $1.5 billion loan does not reflect on Pakistan’s federal foreign debt books and is thus not treated as part of its public debt.