 to defer by one year a $1.2 billion payment on its oil imports.){kind=link}
In a major financial relief ahead of its upcoming review with the International Monetary Fund (IMF), Pakistan has signed an agreement with the Saudi Fund for Development (SFD) to defer by one year a $1.2 billion payment on its oil imports. is expected to help Islamabad bolster its foreign reserves and stabilize its economic position.
Strengthening Economic Ties
Pakistan’s state-run television, took place in the presence of a Saudi delegation led by SFD CEO Sultan Bin Abdul Rehman Al Marshad. Prime Minister Sharif expressed his appreciation for Saudi Arabia’s continued support, noting that the deferred payment facility would provide immediate fiscal relief to Pakistan. The agreement ensures that Pakistan will receive oil on deferred payment for one year, allowing it to manage its foreign exchange reserves more effectively.
The initiative is particularly significant as Pakistan prepares for the first review of its $7 billion IMF bailout in March. Saudi Arabia has consistently played a crucial role in supporting Pakistan’s economy, and this latest arrangement adds to the kingdom’s existing financial commitments.
Saudi Arabia’s Continued Financial Support
The SFD has been an active partner in Pakistan’s development, financing 18 projects and programs worth more than $1 billion. In December 2024, the fund extended its $3 billion deposit with Pakistan’s central bank for another year to further support the country’s foreign exchange reserves. These measures highlight Saudi Arabia’s deep economic ties with Pakistan and its role as a key financial ally.
In addition to the oil payment deferral, the SFD will provide $41 million for a water supply scheme in northwest Pakistan. The project aims to improve access to clean drinking water for 150,000 people, reflecting Saudi Arabia’s broader commitment to Pakistan’s development beyond financial aid.
Pakistan’s Debt Obligations and Financial Maneuvers
Pakistan faces a daunting $26 billion debt servicing obligation in the current fiscal year. In an effort to meet these obligations, the country recently secured a $1 billion loan from two Middle Eastern banks at an interest rate of 6-7%. The Saudi oil deferral agreement provides crucial breathing room as Islamabad continues to navigate its economic challenges.
Finance Minister Muhammad Aurangzeb, in a meeting with the SFD CEO, shared updates on Pakistan’s macroeconomic stability, highlighting improvements in key economic indicators. He expressed gratitude for Saudi Arabia’s long-standing financial assistance and emphasized the importance of continued investment and funding from the kingdom. Aurangzeb also referenced his recent meeting with Saudi Finance Minister Mohammed bin Abdullah Al-Jadaan in Davos, where he was invited to attend a high-level annual conference focused on the challenges and opportunities faced by emerging market economies.
A Step Toward Economic Resilience
The oil deferral agreement marks a crucial step in strengthening Pakistan’s economic resilience. By securing a stable supply of petroleum products while alleviating immediate fiscal pressures, the deal offers much-needed relief to the Pakistani economy.
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Manbilas Singh is a talented writer and journalist who focuses on the finer details in every story and values integrity above everything. A self-proclaimed sleuth, he strives to expose the fine print behind seemingly mundane activities and aims to uncover the truth that is hidden from the general public. In his time away from work, he is a music aficionado and a nerd who revels in video & board games, books and Formula 1.
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