Laxman Gupta, Writer
In 2018 when Imran khan became the Prime minister of Pakistan, the biggest challenge he has to save foreign exchange reserve. The country was facing all time low foreign reserve and high debt from China. In such situation, Saudi came forward and helped Pakistan with package of 6.2 billion US dollar. The $ 3.2 billion oil facility was the part of this $ 6.2 billion package.
This deal got expired in may 2020, USD 3.2 billion oil facility per annum had the provision of renewal for two more years but for time being Saudi has stopped sending oil on loan to Pakistan. Imran khan is putting his effort to renew the agreement.
This $6.2-billion Saudi Arabian package has two part, USD 3 billion cash support and USD 3.2 billion oil facility per annum. This oil facility was on deferred payments to Pak. This facility was supposed to start in Jan 2019 but got delayed and started in July 2020. Pakistan has already returned USD 1 billion Saudi loan — four months ahead of its repayment period. Pakistan could also return the remaining USD 2 billion cash loan, subject to availability of a similar facility from China.
Now what happened
So it is almost clear now , there is crack in OIC and Saudi is not happy with Pakistan. It’s may because of their continuous threat to OIC to make new bloc. Pakistan is continuously threatening OIC that they can make new bloc, if OIC will not take action against India on Kashmir issue as per their expectation. Pakistan in past also have created problem to OIC to not sign or increase business with India.
Now what can be happen
All weather friend of Pakistan’s, China can come forward and help Pakistan with new loan. But definitely, it will not be a good news for Pakistan. At one side it will damage Islamabad’s relation with middle east and increase debt indeed. Already China has given billons of US dollar to complete CPEC and to make dam in POK. If Saudi not renewing this deal, there will be a high chances that UAE also will stop support to Pakistan. The UAE had also announced a USD 6.2 billion package for Pakistan in December 2018, including a USD 3.2 billion oil facility. Saudi & UAE are most powerful countries in middle east and they use to support each other at every possible level, that’s tells the story of their strong friendship. So loosing relation with Saudi means , loosing of OIC membership & loosing relation with middle east and most powerful county of world ‘US’s.
If Saudi renew the agreement, it will come with more terms and condition definitely. It will may include not to threat OIC to take action against India – may be off paper.
Also Read : Pakistan threatened OIC to leave