Saudi Arabia to extend $1 billion oil financing facility to Pakistan

Saudi Arabia will extend a $1 billion oil financing facility to Pakistan during the current fiscal year, according to government sources familiar with the matter, as Islamabad seeks to strengthen its foreign reserves and manage external financing pressures.

Pakistan’s federal government has estimated more than $19.92 billion in external financing needs for the ongoing fiscal year, the sources said.

The government also expects to roll over $9 billion in “safe deposits” from Saudi Arabia and China, including $5 billion from Saudi Arabia and $4 billion from China, as part of commitments made under its agreement with the International Monetary Fund (IMF).

In total, Pakistan aims to secure over $25 billion in external borrowing during the fiscal year, the sources added.

The plan includes rolling over $12 billion in deposits from friendly countries and obtaining $2 billion in loan tranches from the IMF under the existing program.

The Ministry of Finance will oversee the rollover of $9 billion in deposits from Saudi Arabia and China, while the United Arab Emirates’ central bank is expected to roll over $3 billion in deposits.

Project financing will involve contributions from the World Bank, the Asian Development Bank (ADB), and other international financial institutions.

Pakistan also plans to issue $250 million in Panda Bonds in the Chinese market this year.

Additionally, the IMF’s Extended Fund Facility (EFF) program is expected to provide over $2 billion in disbursements during the fiscal year.

The government anticipates receiving $1.924 billion from the ADB, $1.663 billion from the World Bank Group, and $860 million from the Islamic Development Bank. It also plans to issue $400 million in international bonds and launch $610 million worth of Naya Pakistan Certificates.

Economists say the planned rollovers and new financing will provide temporary relief for Pakistan’s balance of payments but warn that heavy reliance on external borrowing could prolong structural weaknesses.

“This financing plan will keep Pakistan afloat in the short term, but it underscores the country’s dependence on bilateral support and debt rollovers rather than sustainable inflows from exports or investments,” said an independent Islamabad-based economist.

“To ensure long-term stability, Pakistan needs to expand its export base and attract foreign direct investment instead of relying on friendly countries year after year.”

He added that the oil facility from Saudi Arabia would ease pressure on Pakistan’s foreign reserves amid rising global energy prices, but “it’s a bandage on a much deeper fiscal wound.”