Pakistan and Saudi Arabia have signed an agreement to extend a $3 billion deposit placed with the State Bank of Pakistan, providing crucial support to the country’s foreign exchange reserves at a time of mounting external financing pressures.
The development was confirmed by Finance Minister Muhammad Aurangzeb, who announced the agreement during his engagements in Washington on the sidelines of the World Bank and IMF Spring Meetings 2026.
The extension of the deposit, which has been a key pillar of Saudi financial support for Pakistan, is aimed at reinforcing the country’s external account and maintaining stability in foreign exchange reserves.
Support comes at a critical economic juncture
Officials said the extension comes at a “critical time” as Pakistan faces significant external obligations, including the repayment of a $3.5 billion loan to the United Arab Emirates this month, which has placed pressure on reserves.
Aurangzeb noted that the Saudi support would help “reinforce foreign exchange reserves and strengthen the country’s external account,” underscoring its importance for meeting targets under the International Monetary Fund programme.
Pakistan has set a target of building reserves to around $18 billion by the end of the fiscal year, equivalent to approximately 3.3 months of import cover, as part of its commitments under the IMF-backed reform programme.
The finance minister also emphasised that the government remains committed to meeting all external obligations on time, highlighting that recent debt repayments, including a $1.4 billion Eurobond, were completed successfully.
Shift to longer-term financial stability
In addition to extending the $3 billion deposit, officials indicated that Saudi Arabia has also moved toward providing longer-term financial backing, with earlier arrangements transitioning away from short-term annual rollovers.
Aurangzeb said Pakistan’s broader external financing strategy is being implemented in a “responsible and disciplined manner,” with plans to diversify funding sources through instruments such as Eurobonds, sukuk and other international market borrowings.
He also recalled recent high-level engagements with Saudi financial leadership, noting that both sides had worked closely to finalise the support package after detailed consultations.
The finance minister expressed gratitude to Saudi leadership, particularly Crown Prince Mohammed bin Salman and the kingdom’s finance officials, for their continued cooperation and timely support.
Confidence boost amid global challenges
Analysts say the extension of the deposit sends a strong signal of confidence to international markets, helping stabilise investor sentiment at a time of global economic uncertainty and regional tensions.
Pakistan has been actively seeking to strengthen its economic position through a combination of bilateral support and multilateral engagement, while also leveraging its growing diplomatic role in regional peace efforts.
The Saudi deposit remains a critical component of Pakistan’s financial safety net, providing liquidity support and helping the country navigate short-term economic challenges while pursuing longer-term structural reforms.
