China has again bailed out Pakistan as it agrees to immediately provide a $1.5 billion financing line to repay the $2 billion Saudi Arabia debt, according to The Express Tribune.
Out of $2 billion, Pakistan is now set to return the $1 billion on coming Monday, said the sources in the finance ministry and the State Bank of Pakistan (SBP). The remaining $1 billion is due in January, they added.
Both the countries have agreed to augment the size of a 2011 bilateral Currency-Swap Agreement (CSA) by an additional 10 billion Chinese Yuan or around $1.5 billion, the sources said. This has increased the size of the overall trade facility to 20 billion Chinese Yuan or $4.5 billion.
The benefit of this arrangement will be that the additional $1.5 billion Chinese loans will not reflect on the book of the federal government and it will not be treated as part of Pakistan’s external public debt.
According to The Express Tribune report, spokespersons for both the SBP and the finance ministry have refused to either confirm or deny this development.
Spokespersons for both the SBP and the finance ministry neither denied nor confirmed the development. The spokesperson for the central bank ducked the questions while the ministry of finance said that it was a “bilateral confidential matter”.
Signed between the SBP and the Peoples Bank of China (PBOC) back in December 2011 ”to promote bilateral trade”, the CSA is a trade finance facility that has been used by Pakistan ever since to repay its foreign debt and maintain comfortable levels of gross foreign currency reserves.
The bilateral Currency Swap Agreement was reached between the SBP and the Peoples Bank of China (PBOC) in December 2011 “to promote bilateral trade, finance direct investment and provide short-term liquidity support”, according to the central bank.
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