Saudi Arabia has agreed to roll over $5 billion in loans provided to Pakistan for another three years, offering significant relief to the country’s external financing needs and easing pressure on its balance of payments.
According to the State Bank of Pakistan (SBP), the extension of the Saudi deposits will help reduce Pakistan’s short-term financial obligations while strengthening the country’s external account position. Officials said the rollover reflects continued financial support from the Kingdom.
The SBP noted that Pakistan currently holds $8 billion in deposits from Saudi Arabia, including $3 billion received in April this year. The latest rollover ensures that $5 billion of these deposits will remain available to support Pakistan’s foreign exchange position.
The central bank also said Pakistan’s external financing requirements have declined to around $21.5 billion for the current period. Officials attributed the improvement to lower debt servicing costs, with interest payments on foreign loans decreasing by around $500 million.
According to the SBP, Pakistan has already repaid approximately $2.2 billion in external debt during July. In addition, refinancing of a $1.3 billion commercial loan from China is expected next month, which is anticipated to further support the country’s external financing plans.
The central bank also revealed that it purchased $9 billion from the open market during the last fiscal year as part of efforts to strengthen Pakistan’s foreign exchange reserves and improve financial stability.
Pakistan has set a target of increasing its foreign exchange reserves to $20.2 billion by December 2026. Officials believe continued support from friendly countries and prudent external account management will help achieve the goal.
The extension of Saudi Arabia’s financial support is being viewed as an important development for Pakistan’s economy, providing greater stability to the country’s external accounts and helping manage upcoming debt repayment obligations.
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