Saudi Arabia Extends Three-Billion-Dollar Financing Rollover to Pakistan
(MENAFN) Saudi Arabia has agreed to extend the rollover of its $3 billion financial facility to Pakistan for an unspecified but “reasonable period,” Pakistani Finance Minister Muhammad Aurangzeb announced Wednesday.
The funding was initially provided in April to help Islamabad settle a $3.5 billion debt obligation to the United Arab Emirates.
The extension comes as expectations surrounding a proposed $10 billion financial backstop from the United States have weakened.
“It has been extended and for a reasonable period. You don’t need to worry as to for how long given the kind of strategic relationship we have,” Aurangzeb told reporters in Islamabad.
The Saudi facility, which supported Pakistan's foreign currency reserves after the UAE unexpectedly requested repayment of its outstanding debt, reached maturity on Oct. 31 under its original three-month arrangement.
Pakistan had repaid the UAE's $3.5 billion debt in April after Abu Dhabi sought immediate settlement. Separately, Riyadh had previously extended another $5 billion financing arrangement with Pakistan through 2028.
Aurangzeb also described his recent discussions with Saudi Finance Minister Mohammed Al-Jadaan as highly positive. The meeting took place on the sidelines of the latest World Bank and International Monetary Fund gatherings in Bangkok.
Commenting on the proposed $10 billion Exchange Stabilization Support Facility (ESSF), which Pakistan requested from Washington in July, Aurangzeb explained that the initial objective had been to secure access to international financial markets.
“What we asked for back in July and were looking at was the market access."
"We have got the market access,” he said, pointing to Pakistan's $3 billion bond issuance in September, which attracted orders totaling $6 billion.
The minister added that securing the proposed US facility would provide additional liquidity, but stressed that Islamabad had alternative financing options if the arrangement did not proceed.
“If that (ESSF) materializes, 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,” the minister said.
Pakistan is aiming to lower its external debt by $4 billion during the current fiscal year, followed by a further $3.5 billion reduction in the next financial year. This compares with a $4.5 billion decrease recorded in the previous fiscal year.
The country's liquid foreign exchange reserves stand at approximately $26.86 billion. The State Bank of Pakistan holds $21.47 billion of that amount, while commercial banks account for around $5.41 billion.
The funding was initially provided in April to help Islamabad settle a $3.5 billion debt obligation to the United Arab Emirates.
The extension comes as expectations surrounding a proposed $10 billion financial backstop from the United States have weakened.
“It has been extended and for a reasonable period. You don’t need to worry as to for how long given the kind of strategic relationship we have,” Aurangzeb told reporters in Islamabad.
The Saudi facility, which supported Pakistan's foreign currency reserves after the UAE unexpectedly requested repayment of its outstanding debt, reached maturity on Oct. 31 under its original three-month arrangement.
Pakistan had repaid the UAE's $3.5 billion debt in April after Abu Dhabi sought immediate settlement. Separately, Riyadh had previously extended another $5 billion financing arrangement with Pakistan through 2028.
Aurangzeb also described his recent discussions with Saudi Finance Minister Mohammed Al-Jadaan as highly positive. The meeting took place on the sidelines of the latest World Bank and International Monetary Fund gatherings in Bangkok.
Commenting on the proposed $10 billion Exchange Stabilization Support Facility (ESSF), which Pakistan requested from Washington in July, Aurangzeb explained that the initial objective had been to secure access to international financial markets.
“What we asked for back in July and were looking at was the market access."
"We have got the market access,” he said, pointing to Pakistan's $3 billion bond issuance in September, which attracted orders totaling $6 billion.
The minister added that securing the proposed US facility would provide additional liquidity, but stressed that Islamabad had alternative financing options if the arrangement did not proceed.
“If that (ESSF) materializes, 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,” the minister said.
Pakistan is aiming to lower its external debt by $4 billion during the current fiscal year, followed by a further $3.5 billion reduction in the next financial year. This compares with a $4.5 billion decrease recorded in the previous fiscal year.
The country's liquid foreign exchange reserves stand at approximately $26.86 billion. The State Bank of Pakistan holds $21.47 billion of that amount, while commercial banks account for around $5.41 billion.
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