In a significant move to bolster its economic stability, Pakistan has signed a landmark agreement with Saudi Arabia, allowing the country to import oil worth $1.2 billion on deferred payments for a period of one year. The deal, finalized on Monday, is set to ease Pakistan’s immediate fiscal challenges while ensuring a stable supply of vital petroleum products, crucial for the country’s energy needs.
The agreement was officially signed during a high-level meeting in Islamabad, where a Saudi delegation led by Sultan Bin Abdul Rehman Al Marshad, CEO of the Saudi Fund for Development (SFD), met with Pakistani Prime Minister Shehbaz Sharif. The Prime Minister witnessed the signing of the oil import financing facility, which is expected to play a pivotal role in securing the country’s energy future, reducing the immediate financial burden on the government, and ensuring the uninterrupted flow of essential resources.
The deal marks an important step in the ongoing efforts to reinforce the economic ties between Pakistan and Saudi Arabia, with both nations committed to enhancing bilateral relations across various sectors. As part of the agreement, Saudi Arabia will supply oil to Pakistan for one year under deferred payment terms, providing the country with a lifeline amid soaring energy prices and increasing fiscal pressures. The move is expected to ease Pakistan’s foreign exchange reserves and help prevent further strain on the country’s already fragile economy.
Prime Minister Shehbaz Sharif, in a statement following the signing, expressed gratitude for Saudi Arabia’s unwavering support. The Prime Minister emphasized that the deferred payment oil facility would not only ensure a stable supply of petroleum products but also help manage the country’s immediate financial challenges. The agreement is seen as an essential step to stabilize Pakistan’s energy sector, which has been facing multiple challenges including high fuel costs, frequent power outages, and an overall energy crisis.
The signing ceremony also included the formalization of a separate agreement for the Gravity Flow Water Supply Scheme in Mansehra, Khyber Pakhtunkhwa. Under this arrangement, the Saudi Fund for Development will provide $41 million to improve access to clean drinking water for over 150,000 people in the region. This initiative is expected to improve public health, reduce waterborne diseases, and significantly enhance the quality of life for local communities.
Prime Minister Shehbaz Sharif also lauded Saudi Arabia’s contributions to various sectors in Pakistan, particularly in areas like energy, infrastructure, education, and health. He specifically noted the Kingdom’s support for Pakistan’s reconstruction efforts following the devastating floods of 2022. Saudi Arabia has played a vital role in aiding the rebuilding of flood-hit areas, making substantial investments in the country’s infrastructure and public services.
In addition to the oil and water supply agreements, the Prime Minister called for the expeditious processing of new projects in the areas of green energy and infrastructure. He stressed that these projects would not only contribute to Pakistan’s long-term economic revival but also serve the needs of local communities, fostering sustainable growth. Sultan Bin Abdul Rehman Al Marshad assured the Prime Minister that Saudi Arabia would continue its support for Pakistan’s development and would expedite the processing of new projects in these sectors.
Later in the day, Sultan Bin Abdul Rehman Al Marshad met with Pakistan’s Finance Minister Muhammad Aurangzeb to discuss broader economic cooperation between the two countries. During the meeting, Aurangzeb shared positive updates on Pakistan’s macroeconomic performance, highlighting improvements in key economic indicators. He emphasized the importance of Saudi Arabia’s ongoing support in financing and investment, which have been instrumental in supporting Pakistan’s economic growth.
Both leaders also discussed expanding bilateral collaboration, particularly in workforce development. Al Marshad noted the significant role of Pakistani workers in Saudi Arabia, where they form the largest foreign workforce. He suggested that both governments work together to offer training programs for young Pakistanis, equipping them with the necessary skills to meet the growing labor market demands in Saudi Arabia.
The discussions highlighted the shared commitment between Pakistan and Saudi Arabia to further strengthen their economic ties, with a focus on investment, infrastructure development, and human resource capacity-building. This strengthened partnership is expected to yield positive outcomes for both countries in the coming years, helping Pakistan address its immediate fiscal challenges while fostering long-term economic growth.