ISLAMABAD: Pakistan has secured a rollover of $3 billion in financial support from Saudi Arabia, providing relief to its external financing position as prospects of a proposed $10 billion US Exchange Stabilisation Support Facility (ESSF) appear uncertain.
Thank you for reading this post, don't forget to subscribe!Finance Minister Muhammad Aurangzeb confirmed the extension while speaking to journalists at Parliament House on Wednesday, saying Riyadh had extended the $3 billion facility originally provided in April to help Pakistan bridge a financing gap arising from $3.5 billion in repayments to the United Arab Emirates.
The facility, which matured on October 31 after an initial three-month term, has been extended for a reasonable period, the minister said, expressing confidence in the longstanding strategic relationship between the two countries.
He disclosed that he had held a productive meeting with Saudi Finance Minister Mohammed Al-Jadaan during the recent World Bank-IMF meetings in Bangkok. Saudi Arabia had already extended its separate $5 billion financial support facility until 2028.
Aurangzeb dismissed the need for additional financial assistance from Riyadh, saying Pakistan’s foreign exchange reserves were sufficient to cover more than three months of imports. The government aims to increase this coverage to four months by the end of the year through access to international capital markets.
Commenting on the proposed $10 billion ESSF requested from the United States in July, the finance minister sought to moderate expectations, saying Pakistan’s immediate objective of regaining access to international capital markets had already been achieved.
He referred to Pakistan’s $3 billion bond issuance in September, which attracted orders worth approximately $6 billion, describing it as evidence of renewed investor confidence.
“If that (ESSF) materialises, fantastic, it will be a liquidity support facility. Otherwise, we have plans for further Eurobond issuance, Panda bond issuance and rupee-linked dollar-settled bond,” he said.
The minister added that he had held meetings with 70 to 80 institutional investors in Bangkok, who had demonstrated a clear understanding of Pakistan’s economic outlook. He said investor interest was evident in five-year and 10-year financing instruments, reflecting the government’s efforts to secure longer-term funding beyond the International Monetary Fund (IMF) programme.
He also highlighted broader opportunities for financial cooperation with the United States, particularly through the US Export-Import Bank and the Development Finance Corporation (DFC), which could support American investors and exporters operating in Pakistan.
Aurangzeb said such financing and credit arrangements would provide tangible economic benefits, adding that Pakistan would continue pursuing its financing strategy regardless of whether the proposed ESSF materialised.
The finance minister also announced that the IMF Executive Board was scheduled to meet in December to consider approval of a $1.2 billion disbursement to Pakistan.
Earlier, briefing the Senate Standing Committee on Finance, he said the government was targeting a reduction of $4 billion in external debt during the current fiscal year and another $3.5 billion next year, compared with $4.5 billion in the previous fiscal year.
He explained that the government was seeking to replace expensive short-term borrowing with longer-maturity financing through international bonds and private placements to reduce refinancing risks.
According to the minister, Pakistan’s external debt had historically increased by $5 billion to $6 billion annually, rising from approximately $45 billion in FY2014-15 to around $100 billion. However, the annual increase had slowed to approximately $1 billion over the past two years.
He maintained that recent Eurobond, Panda bond and private placement transactions were primarily replacement financing arrangements aimed at substituting expensive facilities with more affordable borrowing rather than increasing the country’s overall external debt burden.
Aurangzeb attributed the improvement in economic indicators to fiscal discipline, which had helped contain fiscal and current account deficits. He expressed confidence that the current account deficit would remain below 1% of GDP during the current fiscal year despite higher oil and wheat import bills.
Describing the improvement in foreign exchange reserves as hard-earned economic stability, he said reserves had crossed $21.5 billion, providing a stronger buffer against external shocks, including floods and regional geopolitical tensions.
Finance Secretary Imdadullah Bosal informed the committee, chaired by Senator Saleem Mandviwalla, that public debt had declined to 68.6% of GDP by the end of June 2026 from 75.1% in FY2022-23. He added that year-on-year growth in public debt had slowed to 7.7% in the last fiscal year, the lowest level in two decades.
He further reported that domestic debt stood at Rs58.8 trillion at the end of August 2026, compared with Rs68.4 trillion at the end of June, while external debt remained stable at $98.2 billion.
The finance secretary said Pakistan’s net external financing requirements stood at $11 billion after rollovers and refinancing arrangements. Of this amount, $5 billion had already been repaid during the first four months of the current fiscal year, leaving approximately $6 billion payable over the remaining seven months.
Separately, the Senate committee expressed serious concern over difficulties faced by parliamentarians in obtaining foreign exchange for personal travel.
Senator Saleem Mandviwalla directed the State Bank of Pakistan (SBP) to review existing procedures, particularly clearance requirements for politically exposed persons (PEPs) and the mandatory personal appearance of parliamentarians before exchange companies, despite the submission of valid passports, air tickets and visas.
The committee also expressed displeasure over the SBP’s October 30, 2026 response to a letter sent by its secretary to the central bank governor, observing that the matter had been addressed by a deputy director-level official rather than an appropriately senior authority.
Mandviwalla termed the requirement for parliamentarians to appear personally before exchange companies humiliating and called for an immediate review of the procedures, warning that the committee would take serious notice if the issue remained unresolved.
Story by Khaleeq Kiani
