ISLAMABAD: Pakistan has formally presented eight key requests to Saudi Arabia aimed at deepening long-term economic cooperation and securing sustained financial support during a period of heightened regional instability and domestic economic challenges.
The proposals come at a time when Pakistan faces mounting pressure on its foreign exchange reserves, driven by geopolitical tensions in the Middle East, including disruptions to global oil supply routes following recent conflicts.
Central to the requests is the conversion of the existing $5 billion Saudi deposit, currently held with the State Bank of Pakistan, into a long-term facility spanning 10 years on more favourable terms.
This deposit, provided through the Saudi Fund for Development, has historically served as critical budgetary support and a buffer for external accounts, with periodic rollovers extending its maturity.
Sources familiar with the discussions indicate that the shift to a decade-long arrangement would provide greater predictability for Pakistan’s fiscal planning and reduce reliance on short-term financing.
Another prominent request involves significantly expanding the deferred oil payment facility currently limited to $1.2 billion annually.
Pakistan has proposed increasing this ceiling to $5 billion, while extending the repayment period for each tranche from one year to three years.
The deferred payment mechanism allows Islamabad to import essential petroleum products from Saudi Arabia without immediate strain on reserves, helping stabilise energy supplies and domestic fuel prices.
This enhancement assumes added urgency amid recent disruptions in the Strait of Hormuz, which have prompted Pakistan to seek alternative supply routes through Saudi Arabia’s Red Sea port of Yanbu.
The broader package of eight requests reflects Islamabad’s strategy to build resilient economic ties with Riyadh, a longstanding ally that has extended substantial assistance in past years.
Previous Saudi support includes repeated rollovers of the $5 billion deposit—often at concessional interest rates around 4 per cent—and annual oil financing facilities worth hundreds of millions of dollars.
In recent fiscal periods, such arrangements have contributed significantly to bolstering Pakistan’s external buffers, complementing inflows from multilateral lenders like the International Monetary Fund.
The timing of these proposals aligns with ongoing negotiations for the third review under Pakistan’s $7 billion Extended Fund Facility with the IMF, where maintaining adequate reserves remains a key performance criterion.
Economists note that long-term commitments from friendly countries like Saudi Arabia could ease the burden of costly commercial borrowing and help diversify funding sources beyond traditional multilateral channels.
Additional elements in the eight-point framework reportedly include proposals for securitising up to $10 billion in remittances from the Pakistani diaspora, particularly those in Gulf states.
This mechanism could convert future remittance flows into upfront capital, further strengthening reserves and supporting investment in priority sectors.
Other requests encompass Saudi-backed guarantees for Sukuk issuances, concessional credit lines to promote exports, and enhanced collaboration through institutions such as the Saudi Exim Bank.
These measures aim to foster mutual economic benefits, including increased Saudi investment in Pakistani infrastructure and energy projects.
Bilateral ties between Pakistan and Saudi Arabia have historically extended beyond finance to defence and strategic cooperation, with recent agreements underscoring joint deterrence amid regional volatility.
The current requests build on this foundation, seeking to institutionalise support mechanisms that withstand short-term fluctuations in global markets.
Pakistan’s foreign reserves have shown improvement in recent quarters, partly due to such bilateral inflows, but remain vulnerable to external shocks like rising oil prices or remittance slowdowns from Gulf economies.
Officials emphasise that the proposals are part of a proactive approach to safeguard macroeconomic stability and promote sustainable growth.
No formal response from Saudi authorities has been announced yet, though discussions continue at senior levels.
The outcome of these talks could play a pivotal role in shaping Pakistan’s external financing landscape over the coming decade.
Analysts anticipate that successful agreements would signal renewed confidence in bilateral partnership and provide Islamabad with greater policy space to implement structural reforms.
As regional dynamics evolve, the emphasis on long-term economic collaboration underscores the strategic depth of Pakistan-Saudi relations.