Imran Khan’s government is facing significant financial difficulties, with the cash-strapped country required to repay a $3 billion loan it borrowed from Saudi Arabia within a year, with interest of 4% compounded quarterly. According to a media report, the development highlights tensions between Riyadh and Islamabad that began two years ago and are still present.
Saudi Arabia had agreed in October 2021 to restart its financial support to Pakistan, including around $3 billion in secured deposits and $1.2-1.5 billion in oil supplies on deferred payments. This was to help Pakistan convince the International Monetary Fund (IMF) of its financing plan. Its representatives last week called on Islamabad to “do more” on economic reforms, and go beyond simply raising taxes, The Times of Israel reported.
A tax hike in Pakistan has drawn public criticism and the new financial challenges come as it is unclear whether Beijing provided an urgent three billion dollar loan during Pakistani Prime Minister Imran Khan’s recent visit.
Pakistani Finance Minister Shaukat Tarin defended the interest rate on the Saudi loan by pointing out that interest rates are rising around the world. The four percent interest rate for the Saudi loan is not something bad, Tarin said. There was no possibility of deferred payment on either point. If there had been, it would have been mentioned in the original loan agreement, the minister said.
Evolution also pointed out that the visit last year of Saudi Crown Prince Mohammad bin Salman, when he was greeted on the red carpet, did not help reduce tensions that began with the foreign minister. Shah Mahmood Qureshi demanding that Riyadh convene an OIC meeting to discuss Kashmir. dispute with India. Qureshi had hinted that Saudi Arabia and other Gulf countries were “silent” on the issue because they were more appreciative of the growing economic ties with New Delhi.
The Saudi request indicates that the deterioration in bilateral relations that began two years ago persists. The Saudi Interior Minister was in Islamabad just three days ago when he was received not only by his counterpart but also by Prime Minister Imran Khan and President Alvi. All of these leaders praised the Saudi support in superlative terms and that the Gulf partner was “an indispensable partner,” according to The Times of Israel.
The decision had angered the Saudis and the United Arab Emirates, who both demanded the repayment of loans granted to Pakistan for a longer period and also canceled the concessional sale of fuel with deferred payment. The two Gulf nations have been irritated with Pakistan over the latter’s moves to get closer to Turkey, their rival in Islamic nations politics.
the repeated accusations by Khan and his ministers that the Gulf countries were “diluting” the position of the Islamic Ummah on the Kashmir issue to take advantage of India’s large energy needs.
Therefore, Pakistan’s continued move to play the Kashmir card in Islamic countries, especially the Gulf countries, has therefore been counterproductive for Pakistan,
Summary of news:
- Financial problems for Imran Khan’s government have deepened as Pak has to repay a $3 billion loan to Saudi Arabia.
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