The facility will help Pakistan meet its energy import needs and ease pressure on its foreign exchange reserves
Defense Minister of the Kingdom of Saudi Arabia Khalid bin Salman Al Saud (L to R), 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 Pakistan-Saudi Defense Agreement Saudi Arabia in Riyadh on September 17. Photo: PID
Saudi Arabia has committed to providing Pakistan with a $1 billion oil financing facility in the current 2025-2026 financial year, while also rolling over more than $5 billion in deposits, Finance Ministry officials confirmed on Monday.
According to ministry officials, the billion-dollar oil facility will help Pakistan meet its energy import needs and ease pressure on its foreign exchange reserves. Officials said the Kingdom would also renew over $5 billion in fixed deposits currently placed with the State Bank of Pakistan. Of this amount, $2 billion is expected in December and $3 billion in June 2026.
During the first quarter of the current fiscal year, Pakistan received over 85 billion rupees worth of oil under the Saudi facility, or around $300 million. The facility provides approximately $100 million per month, or 28.37 billion rupees per month in local currency.
Saudi deposits, carrying an annual interest rate of 4%, were rolled over annually to support Pakistan’s external account. The total value of deposits stands at around Rs 1,450 billion, provided as budgetary support. Officials said the continuation of these facilities underlines Riyadh’s commitment to Pakistan’s economic stability amid persistent 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) October 27, 2025
Meanwhile, Prime Minister Shehbaz Sharif arrived in Riyadh for a three-day visit to the Kingdom of Saudi Arabia, where he was warmly welcomed by Saudi dignitaries. During the visit, he will also attend the 9th edition of the Future Investment Initiative.
Last month, Pakistan and Saudi Arabia signed a “Strategic Mutual Defense Agreement,” declaring that “any aggression against either country will be considered an aggression against both,” according to a joint Pakistani and Saudi statement. The agreement 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 a long-standing strategic and defense cooperation, but the latest agreement is seen as significant in light of recent developments, including Israeli strikes on Qatar.
In line with the historic defense agreement with Saudi Arabia, the federal government constituted an 18-member high-level committee earlier this month. The task of the committee is to lead economic negotiations between the two nations within the framework of the Pakistan-Saudi Arabia Economic Framework, the government notification said.
As per the notification, 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.
