SBP receives $2 billion Saudi credit

ISLAMABAD:

Pakistan has received a $2 billion financial inflow from Saudi Arabia, offering timely relief to its foreign exchange reserves just as the country prepares to repay $3.5 billion to the United Arab Emirates (UAE) this month, officials confirmed on Thursday.

The State Bank of Pakistan (SBP) verified the receipt of the funds from Saudi Arabia's Ministry of Finance, while the Ministry of Finance said the assistance forms part of a broader $3 billion financing commitment by Riyadh aimed at stabilising Pakistan's reserves.

In addition, Saudi Arabia has assured the rollover of its existing $5 billion deposits for an extended period, removing the earlier requirement of annual renewals.

Officials said this support would significantly ease pressure on reserves, particularly in light of the large UAE repayment, which accounts for nearly 18% of Pakistan's official foreign exchange holdings.

The inflow comes at a critical juncture as Pakistan moves to meet its external financing needs and maintain reserve targets under its IMF programme.

According to finance ministry sources, the government is aiming to raise reserves to around $18 billion, equivalent to roughly 3.3 months of import cover, in the coming months.

At the same time, Islamabad has finalised arrangements to repay $3 billion to the UAE in a phased manner.

Of this, $2 billion is expected to be paid on April 17, followed by the remaining $1 billion on April 23.

Separately, Pakistan has already cleared a longstanding $450 million loan owed to the UAE.

Officials said Saudi financial backing would help cushion the impact of these outflows, ensuring stability in the external account.

They added that with an additional $3 billion expected from Saudi Arabia, the total Saudi deposit exposure could rise to $8 billion.

Beyond deposits, Pakistan is also seeking to secure further financial space through oil facility arrangements with Saudi Arabia.

The current deferred oil payment facility, valued at around $1 billion annually, is nearing completion, under which Saudi Arabia has been supplying oil worth approximately $100 million per month.

A renewed or expanded facility is under consideration.

Meanwhile, Pakistan expects to receive around $1.21 billion from the International Monetary Fund (IMF) next month, subject to approval by its executive board, following a staff-level agreement.

The government is also planning to tap international capital markets, including issuing bonds and exploring a Panda bond in the Chinese market, alongside potential borrowing from commercial banks.

According to officials, Pakistan currently holds around $12 billion in deposits from key partners, including $5 billion from Saudi Arabia, $4 billion from China, and $3 billion from the UAE, forming a critical pillar of the country's external financing framework.