Saudi Arabia forces Pakistan to repay loans following threats to split OIC over Kashmir

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Riyadh | WTNS | August 13: Kingdom of Saudi Arabia ended a cash and oil loan agreement and made Pakistan return $1 billion which was part of the $6.2 billion deal signed in November 2018.

Islamabad will send its army chief to Saudi Arabia this weekend to try to resolve a growing diplomatic spat in which Riyadh is demanding Pakistan`s early repayment of $3bn loan.

The decade-long friendship of Pakistan and Saudi Arabia has hit a wall. The reason –Islamabad’s threats to split the Riyadh-led Organization of Islamic Countries (OIC) over Saudi Arabia’s reluctance to support Pakistan’s chest thumping on Kashmir.

Saudi Arabia ended a cash and oil supply loan agreement with Pakistan and made Islamabad pay back $1 billion, which was part the $6.2-billion deal signed in November 2018. The 2018 agreement between the two Islamic nations included $3 billion in loans and an oil credit facility amounting to $3.2 billion.

The deal was signed between the two nations when Pakistan PM Imran Khan visited Saudi Arabia in February 2019 to ease Pakistan’s external sector woes, reported the Middle East Monitor.

Pakistan has not received any oil from the Arab nation since May as the $3.2-billion deal for fuel on deferred payments expired two months ago. According to Pakistan news daily Express Tribune, the deal expired in May and efforts are being made by the country’s finance division to renew it.

It is to be noted that Pakistan’s already precarious economic situation is set to worsen with the development as its IMF bailout programme remains suspended for the past five months. The central bank reserves which are majorly made up of loans will deteriorate as Pakistan returns loans and makes up for the suspended oil facility.

Pakistan irks Saudi over Kashmir

The straw that broke the camel’s back came when Pakistan Foreign Minister Shah Mehmud Qureshi issued a warning pointed at Riyadh during an interview with ARY channel. “If you cannot convene it, then I’ll be compelled to ask Prime Minister Imran Khan to call a meeting of the Islamic countries that are ready to stand with us on the issue of Kashmir and support the Kashmiris”.

Media reports says that Pakistan’s army chief will visit Saudi Arabia this weekend, seeking to calm diplomatic strains over Kashmir as financial support for Islamabad hangs in the balance. (Source:TN)