In essence, the $1 billion oil facility and deposit rollovers represent more than financial relief they reaffirm the enduring strategic bond between Pakistan and Saudi Arabia, aligning economic cooperation with mutual security and long-term regional stability.
28 October 2025 | Economic Affairs — Pakistan–Saudi Relations
In a major boost to Pakistan’s financial stability, Saudi Arabia has pledged a $1 billion oil financing facility for fiscal year 2025-26, alongside the rollover of $5 billion in existing deposits with the State Bank of Pakistan (SBP). The move underscores Riyadh’s continued commitment to supporting Pakistan’s economy amid ongoing balance-of-payment pressures and energy import challenges.
Officials from Pakistan’s Ministry of Finance confirmed on Monday that the new facility will help Pakistan meet its oil import needs while easing pressure on foreign exchange reserves. The arrangement forms part of a broader framework of Saudi financial assistance aimed at ensuring Pakistan’s external stability and sustaining energy security during a period of fluctuating global oil prices.
Oil Facility to Ease Energy Import Pressures
According to the finance ministry, the $1 billion oil financing facility will enable Pakistan to import petroleum products on deferred payment, providing critical relief to the government’s foreign reserve management.
During the first quarter of the current fiscal year, Pakistan received oil supplies worth over Rs85 billion, equivalent to about $300 million, under the existing Saudi arrangement. The facility averages $100 million per month, translating to roughly Rs28.3 billion in local currency.
Officials emphasized that the continued inflow of oil under the Saudi program ensures uninterrupted energy supply for domestic consumption while reducing the need for immediate dollar outflows a key factor in stabilizing the Pakistani rupee and supporting energy sector liquidity.
Deposit Rollovers Strengthen Foreign Reserves
In addition to the oil facility, Saudi Arabia will roll over $5 billion in time deposits placed with the State Bank of Pakistan, which are currently part of the country’s foreign exchange reserves.
Of this amount, $2 billion is scheduled for renewal in December 2025, and $3 billion in June 2026. These deposits, carrying a 4% annual interest rate, have been renewed on a yearly basis and constitute approximately Rs1.45 trillion in budgetary support.
Officials noted that the continued rollover reflects Saudi confidence in Pakistan’s economic reforms and fiscal discipline, and provides vital breathing space for Islamabad as it navigates upcoming debt obligations and trade imbalances.
Strategic and Economic Ties Deepen
The announcement coincides with Prime Minister Shehbaz Sharif’s three-day visit to Riyadh, where he was received by senior Saudi officials. During his stay, the prime minister is attending the 9th edition of the Future Investment Initiative (FII) a high profile platform aimed at strengthening international investment partnerships.
The visit also builds on recent developments in Pakistan–Saudi strategic relations, particularly following the signing of a “Strategic Mutual Defence Agreement” last month. The pact, described by both governments as “historic,” declares that any aggression against either country shall be considered an aggression against both.
This defense agreement, signed during PM Shehbaz’s previous visit at the invitation of Crown Prince and Prime Minister Mohammed bin Salman, marks a new phase of multidimensional cooperation between the two long standing allies.
Expanding Cooperation Beyond Defence and Energy
In line with the new defense pact, Pakistan’s federal government has constituted an 18 member high level committee to steer economic negotiations with Riyadh under the Pakistan–Saudi Arabia Economic Framework.
According to an official notification, the committee will oversee efforts to expand bilateral cooperation beyond defense and energy, focusing on areas such as environmental protection, climate resilience, and sustainable development.
Economic analysts view these steps as part of a broader Saudi strategy to consolidate its influence in South Asia, while helping Pakistan stabilize its economy through sustained energy, financial, and investment support.
A Symbol of Enduring Partnership
Saudi Arabia’s renewed financial assistance highlights the depth of its strategic partnership with Pakistan, built on decades of economic, defense, and religious ties.
By maintaining both financial and energy support, Riyadh continues to play a pivotal role in Pakistan’s economic resilience and regional stability. For Islamabad, this infusion of confidence and liquidity comes at a crucial time reinforcing fiscal sustainability and strengthening bilateral trust at a moment when global economic conditions remain uncertain.
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