ISLAMABAD, 17 December, 2020, (TON):  Pakistan has returned $1 billion to Saudi Arabia as the second instalment of a $3 billion soft loan, as Islamabad reaches out to Beijing for a commercial loan to help it offset pressure to repay another $1 billion to Riyadh next month, officials said on Wednesday.

Relations between historically close friends Pakistan and Saudi Arabia suffered a strain earlier this year. Army Chief Gen Qamar Javed Bajwa subsequently visited Riyadh in August to ease tensions. Gen Bajwa also met the Saudi ambassador in Islamabad on Tuesday.

With the $1 billion flowing out, Pakistan — which has $13.3 billion in State Bank foreign reserves — could face a balance of payments issue after clearing the next Saudi instalment.

"China has come to our rescue," a foreign ministry official told Reuters.

A finance ministry official said Pakistan's central bank was already in talks with Chinese commercial banks.

Saudi Arabia gave Pakistan a $3 billion loan and a $3.2 billion oil credit facility in late 2018. After Islamabad sought Riyadh's support over alleged human rights violations by India in the disputed territory of Kashmir, Saudi Arabia has pushed Pakistan to repay the loan.

Saudi Arabia provided $6.2 billion worth of financial package to Pakistan for three years. Which included $3 billion in cash assistance and $3.2 billion worth of annual oil and gas supply on deferred payments.

China agreed to immediately provide $1.5 billion financing line to Pakistan to help the country repay the $2 billion Saudi Arabia debt. Out of $2 billion, Pakistan return the $1 billion on Monday and the remaining $1 billion will be returned in January.