Riyadh extends $3b for another year
Saudi Arabia has extended the maturity of its $3 billion deposit placed with the State Bank of Pakistan (SBP) for another year, continuing a financial lifeline that has helped bolster the country's foreign exchange reserves amid ongoing liquidity challenges.
The extension, made through the Saudi Fund for Development (SFD), maintains a facility that has been in place since 2021 and rolled over repeatedly in support of Pakistan's macroeconomic stability.
The deposit, originally due to mature on December 8, 2025, will now remain parked with SBP until December 2026. Officials said the extension reflects Riyadh's continued commitment to supporting Pakistan's economic foundation, helping strengthen reserve buffers and enabling the country to meet key International Monetary Fund (IMF) benchmarks.
"This will help in strengthening the foreign exchange reserves of Pakistan and contribute to the country's economic growth and development," the SBP said in its communication.
As of November 28, 2025, Pakistan's total liquid foreign currency reserves stood at $19.59 billion, including $14.57 billion held by the central bank and $5.01 billion with commercial banks. SBP's reserves rose slightly during the week, increasing by $14 million, but they have been oscillating around this level for multiple months.
Speaking at the Pakistan Women Entrepreneurship Day 2025 in Karachi, SBP Governor Jameel Ahmad said the country's external debt-to-GDP ratio has fallen from 31% to 26%, the first meaningful improvement in years. "Between 2015 and 2022, external debt increased by $6.4 billion annually. Now the direction has changed. We are stabilising instead of continuously accumulating debt," Ahmad said, adding that Pakistan has not added to external debt stock since 2022.
The governor projected remittances would cross $40 billion this fiscal year, up from $38 billion last year, and forecast a current account deficit between 0% and 1% of GDP despite higher import volumes.
Waqas Ghani Kukaswadia, Research Head at JS Global, while speaking to The Express Tribune, said the rollover was expected and "it's nothing out of the blue." Pakistan is expected to refinance or roll over nearly $16 billion this fiscal year, similar to last year.
"This support, mainly from China and Saudi Arabia along with some multilateral institutions, is already part of our financial equation and embedded in SBP's projections," he said, adding that continuity under the IMF programme remains key to maintaining confidence.
He noted that the IMF reserve threshold set for the current fiscal year is $17.7 billion, while the SBP aims to maintain reserves above $17 billion. Last year's $14 billion target was achieved, but this year's target is higher.
While the deposit rollover has largely been viewed positively, online discourse has highlighted deep structural anxieties, particularly the perception that Pakistan remains dependent on Gulf support rather than undertaking durable fiscal reforms. Policy analysts argue that repeated extensions, while ensuring stability in the short term, delay difficult decisions required to fix issues related to exports, productivity, governance and investment climate.
Some regional analysts frame Saudi assistance as a strategic investment rather than unconditional aid, one that may carry future geopolitical expectations tied to defence cooperation or foreign policy alignment. Economist and K-P Government Adviser Muzammil Aslam, while commenting on the celebratory tone surrounding the extension, argued that the rollover reflects weakness, not success.
"This is not a favour. Pakistan pays interest, around 4% previously and likely near 6% now," he said. He claimed that Pakistan has failed to return any portion of short-term Gulf deposits in four years, estimating total rolled-over deposits from Saudi Arabia, China, and the UAE at $10-12 billion. He likened the situation to a bank manager who spends a customer's deposit and then begs them not to withdraw. "We have already spent it. We simply don't have the money to return," he remarked, adding that there is "no real foreign investment, only announcements."
The Saudi rollover extends Pakistan's financial runway, buying time for reforms, debt management and IMF-linked restructuring. But it also highlights a fragile equilibrium: one dependent on diplomatic goodwill, remittances, and programme confidence rather than export-driven capital generation.
For now, the reserves cushion has strengthened, debt pressure has eased, and policymakers insist the trajectory is improving. Yet the debate underscores a deeper national question, whether stability is being achieved through sustainability, or merely delay. Pakistan has secured another year of breathing space. What it does with that time may define whether the next rollover is celebrated or feared.