Saudi Arabia has rolled over its US$3 billion deposit for Pakistan for another year after the Saudi Development Fund approved an extension, providing the government with critical external financing support. The rollover ensures that the funds currently held by the State Bank of Pakistan remain available to reinforce the country’s foreign exchange reserves during a period of economic adjustment.

The original deposit was made in 2021, when Saudi Arabia extended the facility to help Pakistan manage its external account pressures. Over the past three years, the deposit has been renewed multiple times, reflecting Riyadh’s consistent financial backing amid Pakistan’s ongoing efforts to stabilise its macroeconomic outlook.

The latest extension, approved just before the deposit’s maturity, grants an additional twelve months of relief, offering breathing space as Pakistan works on fiscal consolidation, energy reforms, and export-driven recovery. According to officials familiar with the development, the rollover was confirmed ahead of the scheduled maturity date, ensuring no disruption to the central bank’s foreign reserve position.

Over the past year, the country has also benefitted from deferred repayment arrangements on similar facilities. In 2024, Saudi Arabia allowed Pakistan to defer repayment of an earlier US$3 billion loan, a move that bolstered investor sentiment and helped sustain reserve buffers during IMF programme negotiations.

The continuity of Saudi financial support has been pivotal to Pakistan’s economic stability. The kingdom remains one of Pakistan’s most significant bilateral partners, extending assistance in the form of deposits, oil financing, and investment commitments. For policymakers, the rollover represents both economic relief and diplomatic reassurance at a time when Pakistan seeks to improve sovereign credit ratings and attract new foreign investment.

The deposit is seen as an important confidence-building measure for multilateral lenders and investors who continue to monitor the stability of Pakistan’s reserve position. As structural reforms progress and fiscal tightening continues, external financing buffers remain a key pillar in maintaining currency stability and payment capacity.

With the one-year rollover now in effect, economic planners have additional time to focus on long-term recovery strategies. The extension represents another instance of Saudi Arabia’s willingness to maintain financial support as Pakistan navigates its economic transition and aims for sustained growth.