Saudi Arabia has extended a $5 billion financial facility for Pakistan until December 2028, easing the country's external financing pressure as Islamabad continues economic reforms under an International Monetary Fund (IMF) programme.
Saudi Arabia now holds $8 billion in deposits with Pakistan after providing an additional $3 billion earlier this year, reaffirming its role as one of Islamabad's key financial partners.
State Bank of Pakistan Governor Jameel Ahmad said the extension has reduced Pakistan's gross external financing requirement for the current fiscal year to $21.5 billion, down from the IMF's earlier estimate of about $30 billion.
He said the improvement reflects the Saudi rollover, lower interest costs on external debt, repayments already completed and expected refinancing from China.
Pakistan has already repaid $2.2 billion in external debt this month. It also expects China to refinance a recently repaid $1.3 billion commercial loan. Lower borrowing costs have reduced financing needs by nearly $500 million, Ahmad said.
The remaining financing requirement includes about $7.3 billion in cash deposits, $3.5 billion in commercial loans maturing this fiscal year and $250 million owed to Kuwait under long-standing rolled-over deposits.
Meanwhile, the central bank bought around $9 billion in foreign currency from the domestic market during the last fiscal year, bringing total purchases over the past three years to $28 billion. Foreign exchange reserves are projected to reach $20.2 billion by the end of December.
The latest Saudi support comes as Pakistan continues rebuilding an economy that narrowly avoided sovereign default in 2023 following a balance of payments crisis, critically low foreign exchange reserves and heavy external debt repayments.
The IMF has since described Pakistan's implementation of its $7 billion Extended Fund Facility as strong, citing improved financing conditions, lower inflation and a continuing economic recovery. The Fund approved the programme's first review in May, unlocking about $1 billion alongside a $1.4 billion Resilience and Sustainability Facility to strengthen climate resilience.
The IMF has urged Pakistan to maintain fiscal discipline, broaden its tax base, reform the energy sector, improve the performance of state-owned enterprises and strengthen governance while rebuilding foreign exchange reserves.
Those commitments underpin Pakistan's 18.77 trillion rupee federal budget, which targets 15.26 trillion rupees in tax revenues and a primary surplus of 2 per cent of GDP to keep the IMF programme on track.
The Saudi extension gives Pakistan more time to meet its external obligations while reducing short-term refinancing risks. It also provides a stronger financial buffer as Islamabad seeks to sustain IMF-backed reforms, restore investor confidence and reduce its dependence on repeated short-term external support.
Shipping through the Strait of Hormuz has slowed, according to the latest data, as uncertainty over the waterway’s reopening kept most s...
Escalating attacks on Black Sea ports, cargo vessels and export infrastructure have crippled a vital global grain trade route, threatening supplies...
Afghan business representatives are seeking new trade and investment opportunities at Iran’s 26th International Building Industry Exhibition,...
The collective-defence agreement between Türkiye, Saudi Arabia and Pakistan signals that regional powers no longer want to rely solely on external security guarantees. Whether it becomes a stabilising deterrent or another axis of rivalry remains unresolved.
U.S. President Donald Trump says Washington is not seeking an extension of its memorandum of understanding with Iran, claiming the U.S. already controls the Strait of Hormuz through its naval blockade.
Shipping through the Strait of Hormuz has slowed, according to the latest data, as uncertainty over the waterway’s reopening kept most shipowners away. Six commodity vessels crossed the strait on Tuesday, down from nine the day before and below the 10-day daily average of 11.
Iran has said the Strait of Hormuz will remain closed until the U.S. fulfils the terms of an interim deal, including lifting the maritime blockade and sanctions and releasing Iran’s frozen assets.
Ukraine has targeted at least 20 Wildberries warehouses across Russia since 18 July, disrupting a major logistics network. Kyiv says the strikes aim to disrupt alleged military-linked supplies, while the attacks have caused billions of dollars in losses and wider economic pressure.
Afghan business representatives are seeking new trade and investment opportunities at Iran’s 26th International Building Industry Exhibition, as they look to expand ties with Iranian and international companies.
Alexey Chadayev has resigned as an advisor to Russia’s transport minister after Azerbaijan placed him and two other Russian citizens on an international wanted list over alleged calls for violence and terrorism, amid a widening diplomatic row between Baku and Moscow.
At least six Palestinians have been killed in an Israeli airstrike in Gaza City, according to Palestinian health officials, as efforts by U.S. President Donald Trump’s administration to advance a plan to end the war remain deadlocked.
Georgia’s newly elected Catholicos-Patriarch Shio III is set to visit Istanbul, with the upcoming trip discussed during a meeting with Metropolitan Emmanuel of Chalcedon, a representative of Ecumenical Patriarch Bartholomew I.
Azerbaijan’s strategic rise is turning it from a transit state into a regional rule-setter, with the Middle Corridor giving Baku growing influence far beyond its size, analyst Ahmad Alili says.
You can download the AnewZ application from Play Store and the App Store.
What is your opinion on this topic?
Leave the first comment