ISLAMABAD: Saudi Arabia has extended the repayment period of a $5 billion deposit to Pakistan for another three years, providing significant financial relief. Economists are calling the decision a significant step towards strengthening Pakistan’s external fiscal position and supporting its foreign exchange reserves.
According to the State Bank of Pakistan, the extension will prevent the government from facing a major external payment immediately, which is expected to ease pressure on the balance of payments. The central bank says the move will help stabilize the country’s foreign exchange reserves and better meet its external financing needs.
According to central bank data, Saudi Arabia’s total deposits in Pakistan have now reached $8 billion, including $3 billion received in April this year. This financial support reflects the ongoing economic partnership between the two countries.
The State Bank further said that Pakistan’s overall external financial requirements have reduced to $21.5 billion during the current fiscal year, while interest payments on external debt have also decreased by about half a billion dollars. According to economic experts, this progress is being considered a positive signal for the government’s debt management and financial discipline.
According to the data, Pakistan has repaid $2.2 billion in external debt in July, while refinancing of $1.3 billion in commercial debt from China is expected next month, which is expected to further improve the availability of external financial resources.
According to the central bank, $9 billion was purchased from the open market during the past one year, while the target has been set to increase foreign exchange reserves to $20.2 billion by December 2026. Experts say that an increase in reserves is considered important not only for the stability of the rupee but also for the confidence of foreign investors.
Economic analysts say Saudi Arabia’s extension of the deposit period is a major diplomatic and financial victory for Pakistan. They say the decision will reduce the immediate pressure to repay external debt, strengthen financial stability and allow the government to focus more on economic reforms and development priorities.
