By The South Asia Times

ISLAMABAD - Pakistan has received a major boost to its external financing position after Saudi Arabia announced an additional USD 3 billion in deposits and agreed to extend its existing USD 5 billion deposit on a long-term basis, according to Pakistan’s Finance Ministry.

The announcement was made by Federal Minister for Finance and Revenue Muhammad Aurangzeb while speaking to the media in Washington, D.C., on the sidelines of the World Bank–IMF Spring Meetings 2026.

The latest Saudi financial support is expected to be disbursed within the coming week and comes at a time when Pakistan is working to stabilize its external account under an ongoing IMF-supported programme.

Aurangzeb said the additional inflows would help reinforce Pakistan’s foreign exchange reserves and support the government’s target of building reserves to around USD 18 billion by the end of the fiscal year, equivalent to roughly 3.3 months of import cover.

According to official figures, Pakistan’s current foreign exchange position stands at over USD 16 billion held by the State Bank of Pakistan, while an additional more than USD 5 billion is held in commercial banks, providing a combined buffer of over USD 21 billion.

Officials say the strengthening reserve position has been supported by improved external inflows, timely debt repayments, and renewed confidence from bilateral partners and international financial institutions.

- Saudi Support and Strategic Financial Backing

The Finance Minister confirmed that the existing USD 5 billion Saudi deposit, previously subject to annual rollover arrangements, will now be extended for a longer duration, significantly reducing rollover uncertainty.

He described the Saudi support as arriving at a “critical time” for Pakistan’s external financing needs and acknowledged the role of Saudi leadership, including Mohammed bin Salman and Saudi Finance Minister Mohammed bin Abdullah Al-Jadaan, in finalizing the arrangement.

Aurangzeb said he had held detailed discussions with Saudi officials both in Washington and earlier in Islamabad, alongside senior representatives from the State Bank of Pakistan and Pakistan’s diplomatic mission in the United States.

Highlighting recent economic developments, the minister noted that Pakistan successfully repaid a USD 1.4 billion Eurobond last week, calling it a “non-event” that demonstrated improving external stability and timely debt servicing capacity.

He said Pakistan remains committed to meeting all external obligations on schedule and continues to execute a clearly defined financing strategy under its IMF programme.

Aurangzeb added that international stakeholders, including the IMF, World Bank, and global investors, have expressed growing confidence in Pakistan’s macroeconomic direction, particularly amid ongoing reforms and diplomatic engagement.

The minister also pointed to broader diplomatic momentum, noting that Pakistan’s recent international engagement, including its facilitation role in high-level diplomatic dialogue between key global actors, has been positively acknowledged by international partners.

He said this improved sentiment is complementing financial inflows and strengthening Pakistan’s external outlook.

Aurangzeb outlined Pakistan’s ongoing efforts to broaden its financing base through new instruments, including a Global Medium-Term Note (GMTN) programme and an upcoming Panda Bond issuance in Chinese markets.

These initiatives, he said, are aimed at diversifying funding sources, deepening capital market access, and reducing reliance on short-term deposits.

The Finance Minister reaffirmed the government’s commitment to macroeconomic stability, reform continuity, and sustained engagement with bilateral and multilateral partners.

He said a more detailed briefing would be provided at the conclusion of his Washington visit, as Pakistan continues efforts to consolidate external stability and build long-term financial resilience amid a challenging global economic environment.