Pakistan has had to pay over ₹ 26 billion in interest cost to China to repay a maturing debt in the fiscal year 2020-21, reported ANI citing local media and other sources. According to the annual financial statement that was released by the State Bank of Pakistan (SBP) on Friday, the bank tapped the $4.5 billion or 30 billion yuan trade finance under the China-Pakistan swap arrangement. Reportedly, the already drowning in debt country is facing scores of “hidden debts” totalling $385 billion due to China’s Belt and Road Initiative (BRI) project.
According to a report by AidData, an international development research lab based at the College of William and Mary in Virginia, China has used debt rather than an aid to establish a dominant position in the international development finance market.
“During the year, the overall limit of 20 billion yuan has been further extended to 30 billion yuan for a period of three years against the rupee with the maturity buckets of three months to one year. These purchases have been fully utilised as of June 30, 2021,” mentioned ANI report citing source to The Express Tribune.
Pakistan receives financial package from Saudi Arabia
A recent report by Pakistan’s Ministry of Finance information, Saudi Arabia has provided the neighbouring country a $6.2 billion financial package for three years in 2018 which Saudi claimed back “ahead” of its schedule. Interestingly, Pakistan had repaid the loan to Saudi after taking a loan of the same amount from China. The ANI report also mentioned that Pakistan has been repaying foreign debts using the Chinese trade finance facility.
China- Pakistan’s “all-weather friend”
Earlier, in April, Pakistan PM Imran Khan had claimed to have resisted pressure from the US and other Western nations to downgrade ties with its “all-weather friend” China. Speaking exclusively to China’s English-language state broadcaster China Global Television Network (CGTN), he admitted that Pakistan was rattled by the growing clout of the Quad. India, Australia, the US and Japan have formed the ‘Quad’ coalition to counter China’s aggressive behaviour in the Indo-Pacific region. Weighing in on the special relationship with China, Imran Khan stated, “Whenever Pakistan was in trouble politically, internationally, when we had conflicts with our neighbour, China always stood with us.”