Saudi Arabia has agreed to roll over Pakistan’s $5 billion deposit for another three years, providing significant relief to the country’s external financing needs, State Bank of Pakistan (SBP) Governor Jameel Ahmed said while speaking to reporters on Wednesday.
The extension reduces Pakistan’s short-term external debt repayment obligations and supports the country’s efforts to strengthen its foreign exchange position amid ongoing economic reforms.
Pakistan’s External Financing Needs Ease
According to the SBP governor, Pakistan currently holds $8 billion in deposits from Saudi Arabia. This includes a separate $3 billion deposit that was rolled over in April 2026.
With the latest extension, Pakistan’s external financing requirement for the current fiscal year has declined to $21.5 billion, easing pressure on the country’s balance of payments.
The rollover is expected to provide greater financial stability by reducing immediate repayment commitments while allowing the government to focus on securing additional external inflows.
External Debt Interest Costs Decline
The central bank also reported a decline in Pakistan’s external debt servicing costs.
According to SBP data, interest payments on external debt have fallen by nearly $500 million, reflecting lower financing costs and improved debt management.
During July, Pakistan repaid $2.2 billion in external loans as part of its scheduled debt obligations.
Officials also indicated that the refinancing of a $1.3 billion commercial loan from China is expected to be completed next month, further supporting the country’s external financing position.
SBP Continues Efforts to Strengthen Forex Reserves
The State Bank of Pakistan has continued to bolster the country’s foreign exchange reserves through market interventions.
Earlier, the central bank disclosed that it had purchased $9 billion from the open market during FY26 to strengthen its reserve position.
The SBP is targeting foreign exchange reserves of $20.2 billion by December 2026, with the goal expected to be achieved through a combination of improved external inflows, debt rollovers from bilateral partners, and prudent foreign exchange market operations.
The latest rollover from Saudi Arabia is expected to play an important role in supporting Pakistan’s external financing strategy and maintaining stability in the country’s foreign exchange reserves.
