Pakistan has formally requested the Kingdom of Saudi Arabia to extend the $1.2 billion Saudi Oil Facility for an additional two years after the current arrangement expires next month, according to official sources reported by The News. The move aims to ensure continuity of the facility throughout the completion of Pakistan’s ongoing program with the International Monetary Fund (IMF). Under the existing terms, Saudi Arabia provides $100 million per month in oil supplies on deferred payment terms, offering Pakistan critical support for energy imports.
If approved, the extension could allow Pakistan to access up to $1.2 billion over the next year, potentially extending the facility until mid-2027. The request underscores the government’s strategy to maintain liquidity in the energy sector while aligning with IMF program commitments. Officials from the Ministry of Finance and the Ministry of Petroleum have yet to issue formal statements regarding the request.
Pakistan’s economic team is currently in Saudi Arabia, engaging in high-level discussions not only on the extension of the oil facility but also on broader bilateral cooperation. Talks include potential Saudi investment opportunities under Pakistan’s Special Investment Facilitation Council framework, aimed at attracting foreign capital to boost domestic infrastructure, energy, and industrial projects. Analysts note that these discussions reflect Pakistan’s broader strategy to diversify funding sources and strengthen foreign partnerships amidst challenging economic conditions.
In a parallel development, Pakistan is also seeking a rollover of $2 billion in deposits previously placed by the United Arab Emirates with the State Bank of Pakistan. The original deposits matured in January, and the UAE had provided a one-month extension. Now, Pakistani officials have requested a full one-year rollover, extending the deposits until February 2027. These funds are seen as vital to maintaining central bank reserves and stabilizing the currency amid ongoing economic pressures.
Government officials caution that if the rollover is not secured, Pakistan would be required to repay the $2 billion within the current month, creating potential stress on the country’s foreign exchange reserves. Observers highlight that these financial maneuvers with Saudi Arabia and the UAE are part of a broader effort to manage external financing obligations and maintain macroeconomic stability while meeting IMF program conditions.
The simultaneous pursuit of the Saudi Oil Facility extension and UAE deposit rollover reflects a proactive approach by Pakistan to secure immediate funding and maintain energy and financial stability. By leveraging strong bilateral relationships, the government aims to provide continuity in energy supply, enhance foreign investment inflows, and sustain the country’s financial resilience over the next several years.
These developments underline the critical role of strategic international partnerships in supporting Pakistan’s economic recovery and stability. The outcomes of these negotiations are likely to influence investor confidence, balance of payments management, and broader economic planning as the country navigates ongoing fiscal and energy challenges.
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