Saudi Arabia promises Pakistan billion-dollar oil facility

Saudi Arabia has committed to extending a $1 billion oil financing facility to Pakistan during the current fiscal year 2025-26, while at the same time renewing more than $5 billion in deposits, Finance Ministry officials confirmed on Monday.

According to ministry officials, the billion-dollar oil facility will help Pakistan meet its energy import needs and ease pressure on its foreign exchange reserves. Officials said the Kingdom will also roll over more than $5 billion in term deposits currently placed in the State Bank of Pakistan. Of the amount, $2 billion matures in December and $3 billion in June 2026.

During the first quarter of the current fiscal year, Pakistan received over Rs 85 billion in oil supplies under the Saudi facility, equivalent to about $300 million. The service provides approximately 100 million dollars per month, which translates to 28.37 billion rupees per month in local currency.

Saudi deposits, which have an annual interest rate of 4%, are renewed every year to support Pakistan’s external account. The total value of deposits amounts to approximately Rp 1.45 trillion, granted as budget support. Officials said the continuation of these facilities underscores Riyadh’s commitment to Pakistan’s economic stability amid persistent fiscal challenges.

Meanwhile, Prime Minister Shehbaz Sharif arrived in Riyadh for a three-day visit to the Kingdom of Saudi Arabia, where he was warmly received by Saudi dignitaries. During the visit, he will also attend the ninth edition of the Future Investment Initiative.

Last month, Pakistan and Saudi Arabia signed a historic “Strategic Mutual Defense Agreement,” declaring that “any aggression against either country will be considered aggression against both,” according to a joint statement between Pakistan and Saudi Arabia. The pact was signed during Prime Minister Shehbaz’s visit to Riyadh at the invitation of Saudi Crown Prince and Prime Minister Mohammed bin Salman bin Abdulaziz Al Saud.

Pakistan and Saudi Arabia have long-standing strategic and defense cooperation, but the latest pact is seen as significant in the context of recent developments, including the Israeli attacks on Qatar.

In compliance with the historic defense agreement with Saudi Arabia, the federal government constituted an 18-member high-level committee earlier this month. The task of the committee is to lead economic negotiations between the two nations under the Pakistan-Saudi Arabia Economic Framework, according to the government notification.

According to the notification, the committee, formed by Prime Minister Shehbaz, will oversee discussions aimed at expanding cooperation beyond defense and energy to include environmental protection and climate stability.