Saudi Arabia releases $1 billion to Pakistan as part of $3bn deposit deal amid external financing pressure

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Islamabad: The State Bank of Pakistan (SBP) confirmed on Tuesday that Pakistan has received $1 billion from Saudi Arabia as part of a recently agreed financial support package.

According to the central bank, the funds were transferred on April 20 as the second installment of a $3 billion deposit arrangement. The first tranche of $2 billion had been received last week.

The financial assistance follows Prime Minister Shehbaz Sharif’s recent visit to Saudi Arabia, aimed at strengthening diplomatic and economic ties and promoting regional stability in the Middle East.

Saudi Arabia has also pledged an additional $3 billion in deposits and extended an existing $5 billion financing facility for Pakistan by three more years, providing further relief to the country’s external financing needs.

The support comes at a time when Pakistan is facing pressure on its foreign exchange reserves. The country is expected to repay a $3.5 billion loan to the United Arab Emirates this month, adding strain to its external account and raising concerns about meeting International Monetary Fund (IMF) programme targets.

Pakistan’s foreign reserves stood at $16.4 billion as of late March, enough to cover nearly three months of imports. However, upcoming repayments and global economic challenges, including rising oil prices and geopolitical tensions, are putting additional pressure on the economy.

Earlier this year, Pakistan was unable to secure a rollover of its UAE loan, highlighting growing challenges in external financing. While the country continues to work under IMF-backed economic reforms, analysts warn that external vulnerabilities remain a key risk amid tight global financial conditions.