Saudi Arabia Rolls Over USD 3 Billion For Pakistan As Hopes Of USD 10 Billion US Support Fade

Saudi Arabia has extended its USD 3 billion financing facility for Pakistan for a “reasonable period”, providing temporary relief to Islamabad as it faces mounting external debt obligations and uncertainty over a proposed USD 10 billion financial support facility from the United States (US).

Pakistan Finance Minister Muhammad Aurangzeb confirmed the extension on Wednesday, saying the facility had been renewed beyond its October 31 maturity date. Saudi Arabia initially provided the funding in April 2026 for three months after Pakistan repaid USD 3.5 billion to the United Arab Emirates (UAE). Riyadh had separately extended its existing USD 5 billion deposit until 2028, taking its total financial deposits with Pakistan to USD 8 billion.

Speaking to journalists at Parliament House, Aurangzeb said the extension reflected the strategic relationship between the two countries. He did not disclose the revised repayment deadline. He also ruled out seeking additional assistance from Riyadh, saying Pakistan's foreign exchange reserves covered more than three months of imports.

Pakistan's total liquid foreign exchange reserves stood at approximately USD 26.86 billion, comprising USD 21.47 billion held by the State Bank of Pakistan and USD 5.41 billion with commercial banks. The government aims to increase import cover to four months by the end of the current fiscal year.

The Saudi rollover comes as prospects of a proposed USD 10 billion Exchange Stabilisation Support Facility (ESSF) from the US, requested in July, have weakened. Aurangzeb said Pakistan had achieved its immediate objective of regaining access to international capital markets through a USD 3 billion bond issuance in September, which attracted orders worth USD 6 billion.

He said Islamabad would proceed with further Eurobond and Panda bond issuances, rupee-linked dollar-settled bonds and private placements, even if the American facility did not materialise. The government intends to replace expensive short-term borrowing with cheaper, longer-maturity financing. Aurangzeb also revealed that he had met 70-80 institutional investors in Bangkok, with interest in five-year and 10-year maturities.

Pakistan is also exploring financing through the US Export-Import Bank and Development Finance Corporation to support American investors and exporters.

Meanwhile, the International Monetary Fund (IMF) Executive Board is expected to meet in December to consider a USD 1.2 billion disbursement to Pakistan.

Finance Secretary Imdadullah Bosal said public debt declined to 68.6 per cent of GDP in June 2026 from 75.1 per cent in 2022-23, while annual public debt growth slowed to 7.7 per cent, its lowest in 20 years. Foreign debt stood at USD 98.2 billion.

Pakistan is targeting a USD 4 billion reduction in external debt this fiscal year and another USD 3.5 billion next year. Its net external financing requirement stood at USD 11 billion after rollovers and refinancing, of which USD 5 billion had already been repaid, leaving USD 6 billion due over the next seven months.