China bails out Pakistan to Saudi debt

Pakistan is facing a continuous Financial instability and a recurring problem of repayment of its foreign debt to the donor Countries and institutions. This problem has been faced by every previous government and each government tackled the situation by taking more loan from the International donor institutions or friendly countries. Similar situation was arose in 2019, when Prime Minister himself approached to Saudi Arabia and with the personal interest of Crown Prince Muhammad Bin Sulman, Pakistan got $ 3 billion as Cash assistance and $ 3.2 billion of oil and gas purchase on deferred payments. Now, today is the time of repayment of Saudi loan and Pakistan is compelled to take more loan from somewhere else. Luckily, Pakistan and China has a bilateral Currency Swap Agreement (CSA) between State Bank of Pakistan (SBP) and People’s Bank of China (PBOC) since 2011. Under this agreement PBOC agreed to provide additional $ 1.5 billion or 10 billion Chinese Yuan to Pakistan.

Government has an edge in this arrangement that this money will not considered as external debt, but under CSA it is a Chinese trade finance facility being used by Pakistan to pay its foreign debt and maintenance of foreign reservoir at required level since 2011. All these arrangements are not long term solution of the problem. Pakistan’s weak economy, less exports and increasing ratio of imports now it also include wheat, sugar and other edibles along with ever increasing internal circulation debt are the main reasons for this situation.

Pakistan can’t move forward with these limitations and problems. It has to find out its permanent solution which lies in a industrial based strong economy. The question is how Pakistan can earn more money with less investment. Tourism and agriculture are two sectors in which Pakistan has such potential and resources if we Developed them as per International standards and requirements we can be able to get out of this situation. Although, current government had these two points on its agenda but it needs religious and dedicated efforts to attain the required objectives.

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The Frontier Post

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