Saudi Arabia extends term of $3B deposit with Pakistan

Saudi Arabia has extended the term of its $3 billion deposit with Pakistan for another year, providing a timely boost to the country’s foreign exchange reserves and reinforcing the longstanding economic partnership between the two nations, government sources said Thursday.

The deposit, held at the State Bank of Pakistan, was originally scheduled to mature on December 4.

Pakistan's total foreign exchange reserves stood at $19.6 billion, according to the State Bank. Of these, $14.56 billion is held with the SBP and $5.04 with the commercial banks.

Saudi Arabia first provided $3 billion under an agreement signed in 2021, when Pakistan was facing severe balance-of-payments pressures and declining foreign reserves.

The extension ensures that the funds will remain available to help the country manage imports, stabilize its currency, and meet external financial obligations.

“The decision reflects the strength of our bilateral relationship and Saudi Arabia’s continued support for Pakistan’s economic stability,” said a senior official familiar with the matter, speaking on condition of anonymity.

The move comes at a critical time for Pakistan’s economy, with rising debt servicing costs and ongoing negotiations with the International Monetary Fund and other international lenders.

Economists said the extension provides short-term relief, allowing policymakers more room to implement reforms and secure additional financing from international partners.

“The extension is an important signal to markets and investors,” said an economist based in Islamabad. “It demonstrates that Pakistan has reliable allies in the region, which can help maintain financial stability while the country navigates structural reforms.”

While the deposit extension will not solve Pakistan’s long-term economic challenges, it provides a crucial cushion for the government to address pressing liquidity needs, manage imports of essential goods, and negotiate with international financial institutions.

Officials said that such support strengthens not only Pakistan’s economy but also the broader strategic and diplomatic ties between the two countries, which have historically collaborated on energy, trade, and development projects.

With this latest extension, Pakistan can continue to rely on a portion of its reserves to maintain economic stability while seeking longer-term solutions to structural fiscal and balance-of-payments challenges.