The facility will help Pakistan meet its energy import requirements, ease pressure on its foreign exchange reserves
Minister of Defense of the Kingdom of Saudi Arabia Khalid bin Salman Al Saud (from L), Prime Minister Shehbaz Sharif, Crown Prince Muhammad bin Salman bin Abdulaziz Al Saud and Chief of Army Staff Field Marshal Asim Munir in a photo after the signing ceremony of the defense agreement between Pakistan and Saudi Arabia in Riyadh on September 17. Photo: PID.
Saudi Arabia has committed to extend a $1 billion oil financing facility to Pakistan during the current fiscal year 2025-2026, while rolling over $5 billion in deposits, finance ministry officials confirmed on Monday.
According to ministry officials, the $1 billion oil facility will help Pakistan meet its energy import requirements and ease pressure on its foreign reserves. Officials said the Kingdom will also transfer $5 billion in time deposits currently held with the State Bank of Pakistan. Of the amount, $2 billion is due in December and $3 billion in June 2026.
During the first quarter of the current fiscal year, Pakistan received over Rs 85 billion in oil supplies under the Saudi facility, equivalent to about $300 million. The facility provides about $100 million per month, which is equivalent to Rs28.37 billion per month in local currency.
The Saudi deposits, which carry an annual interest rate of 4%, have been renewed every year to support Pakistan’s external account. The total value of the deposits is approximately Rs 1.45 trillion, extended as budgetary support. Officials said the continuation of these facilities underscores Riyadh’s commitment to Pakistan’s economic stability amid ongoing fiscal challenges.
Prince Mohammed bin Abdulrahman bin Abdulaziz, Deputy Governor of Riyadh, warmly welcomed Prime Minister Shehbaz Sharif upon his arrival at King Khalid International Airport to attend the 9th edition of the Future Investment Initiative.#PakistanSaudiPartnership pic.twitter.com/QEju0GV7NM
— Government of Pakistan (@GovtofPakistan) 27 October 2025
Meanwhile, Prime Minister Shehbaz Sharif arrived in Riyadh for a three-day visit to the Kingdom of Saudi Arabia, where he was warmly received by Saudi dignitaries. During the visit, he will also participate in the 9th edition of the Future Investment Initiative.
Last month, Pakistan and Saudi Arabia signed a landmark “strategic mutual defense agreement” declaring that “any aggression against either country shall be regarded as aggression against both”, according to a joint Pak-Saudi statement. The pact was signed during Prime Minister Shehbaz’s visit to Riyadh at the invitation of Saudi Crown Prince and Prime Minister Mohammed bin Salman bin Abdulaziz Al Saud.
Pakistan and Saudi Arabia have long-standing strategic and defense cooperation, but the latest pact is seen as important in light of recent developments, including Israeli attacks on Qatar.
Under the historic defense deal with Saudi Arabia, the federal government earlier this month constituted an 18-member high-level committee. The task of the committee is to conduct economic negotiations between the two nations under the Pakistan-Saudi Arabia Economic Framework, the government release said.
According to the announcement, the committee, formed by Prime Minister Shehbaz, will oversee discussions aimed at expanding cooperation beyond defense and energy to include environmental protection and climate stability.
