Saudi Arabia has finalised a $3 billion aid package to Pakistan, providing a crucial boost to its foreign reserves amid economic challenges and strained relations with the UAE.
Key Points
- Saudi Arabia completes a USD 3 billion aid package to boost Pakistan's foreign reserves.
- The State Bank of Pakistan confirms receiving the final USD 1 billion tranche from Saudi Arabia.
- The loan follows Prime Minister Shehbaz Sharif's diplomatic efforts in Saudi Arabia.
- Pakistan returned USD 2 billion to the UAE after failing to secure a loan rollover.
- Pakistan seeks to stabilise foreign exchange reserves with a USD 1.2 billion IMF loan.
Pakistan has received the second and final tranche of USD 1 billion from Saudi Arabia, as part of a USD 3 billion aid package aimed at boosting its foreign reserves, the state bank said on Tuesday.
Last week, Saudi Arabia pledged USD 3 billion in deposits for Pakistan and extended its existing USD 5 billion facility for a further three years.
Saudi Arabia's Financial Support
The State Bank of Pakistan (SBP) confirmed through a social media post that it has received the second tranche from Saudi Arabia, completing the USD 3 billion transaction after it received USD 2 billion last week.
"State Bank of Pakistan has received funds of USD 1 billion from Ministry of Finance, Kingdom of Saudi Arabia in the value date of 20 April 2026," the bank said.
Impact on Pakistan's Economy
The fresh loan came after Prime Minister Shehbaz Sharif visited Saudi Arabia to push diplomatic efforts for promoting peace in West Asia.
With this, Saudi Arabia has become the single largest country to have placed a total of USD 8 billion in cash deposits with the central bank.
Pakistan's Debt Management
Riyadh agreed to make the deposit at a time when Islamabad had to return a USD 3.5 billion loan to the United Arab Emirates.
Pakistan returned USD 2 billion to the UAE last week, after it failed to secure an agreement with them to roll over the loan.
Seeking Financial Stability
Pakistan is also seeking to keep its foreign exchange reserves stable with a USD 1.2 billion loan from the International Monetary Fund (IMF), but has to ensure that it meets the staff loan programme targets.
The country's external account has come under pressure due to the conflict in West Asia, which has also led to strained relations with the UAE.
According to official figures, Pakistan's foreign exchange reserves stood at USD 16.4 billion as of March 27, sufficient to cover close to three months of imports.
