ISLAMABAD, Saudi Arabia has agreed to roll over Pakistan’s $5 billion loan for another three years, providing significant relief to the country’s external financing position and easing immediate repayment pressures.
According to the State Bank of Pakistan (SBP), the rollover of the $5 billion facility has reduced Pakistan’s short-term external debt repayment burden and strengthened the country’s financial stability.
The central bank stated that Pakistan currently holds $8 billion in deposits from Saudi Arabia, including the $3 billion deposit received in April this year under bilateral financial support arrangements.
The SBP further noted that Pakistan’s external financing requirement for the current fiscal year has declined to $21.5 billion, reflecting improvements in debt management and financing arrangements.
The central bank said interest payments on external loans have also declined by nearly half a billion dollars, helping reduce the country’s debt servicing costs.
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According to the SBP, Pakistan has already repaid $2.2 billion in external loans during July, while the refinancing of a $1.3 billion commercial loan from China is expected next month.
The State Bank also revealed that it purchased $9 billion from the open market during the previous fiscal year as part of its foreign exchange management strategy.
Looking ahead, the SBP has set a target of increasing Pakistan’s foreign exchange reserves to $20.2 billion by December 2026, supported by improved external inflows, refinancing arrangements, and prudent monetary management.
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The latest Saudi financial support is expected to strengthen investor confidence and provide additional stability to Pakistan’s external account as the government continues efforts to improve macroeconomic indicators.
