Pakistan has to return USD 3 billion to Saudi Arabia within one year: Finance Minister Shaukat Tarin

Cash-strapped Pakistan has to return USD 3 billion to Saudi Arabia within a year which it had borrowed from Riyadh in 2021 to improve its dwindling foreign exchange reserves, it emerged on Friday.

Finance Minister Shaukat Tarin told the Senate, the upper house, that the Saudi Fund for Development (SFD) in October 2021 placed the amount in the account of the country’s central bank, the State Bank of Pakistan.

Under an agreement, Saudi Arabia revived its financial support to Pakistan, including about USD 3 billion in deposits and USD 1.2 billion to USD 1.5 billion worth of oil supplies on deferred payments. Pakistan also pledged to return the USD 3 billion within a year.

Tarin said that the interest rate on the loan was four per cent which would have to be paid every three months.
“Interest rates are rising across the world. The interest rate for the Saudi loan being four per cent is not something bad,” he said, adding the principal amount would have to be returned in lump sum.

He said there was no clause in the agreement to extend the loan.

“The Saudi government has told us that they can ask for their money back if Pakistan defaults at any point,” Tarin said and added that there was no question of default.

State-run Radio Pakistan quoted Tarin as saying that Pakistan would start getting crude oil from Saudi Arabia on deferred payments from March.

The oil-rich Kingdom earlier provided USD 3 billion in cash deposits and extended a USD 3 billion oil facility in 2018, but Pakistan had to return USD 2 billion after ties deteriorated between the two nations in 2020.