Pakistan and Saudi Arabia reach $1.2 billion energy financing agreement to stabilize economy

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Pakistan received Saudi Arabia's $1.2 billion oil financing and debt rollover, which, together with multilateral assistance, formed an economic stability network to help advance energy security and structural reforms.

the Pakistani government announced a $1.2 billion strategic oil financing agreement with Saudi Arabia, the funds will be injected in batches from March 2025 in the form of $0.1 billion per month until February of the following year. This arrangement aims to double strengthen the national energy security framework and foreign exchange reserve buffer capacity, and inject critical liquidity into an economy that continues to face balance of payments pressures.

economic analysis shows that the financing coincides with the critical stage of deepening structural reforms in Pakistan. In the first eight months of this fiscal year (July to February), Islamabad has received a total of US $6 billion through multilateral channels, including an extended credit line of US $1 billion from the International Monetary Fund. Superimposed on this Saudi financing, the formation of a multi-level international aid network, effectively alleviate the pressure on foreign exchange reserves.

The special provisions of the agreement show that the Saudi Development Fund has simultaneously agreed to extend the US $1.2 billion oil import due in the near future for one year. This debt restructuring measure has significantly improved Pakistan's short-term debt service pressure. The dual-track parallel financial support mechanism-new financing overlaid with debt extensions-demonstrates Saudi Arabia's special role as a traditional ally in Pakistan's economic stabilization process.

Experts in the energy sector pointed out that the financing agreement not only ensures a stable oil supply in the next 12 months, but also provides support for the rupee exchange rate through the enrichment of foreign exchange reserves. Combined with the IMF reform plan, these flows will form a policy synergy to help Pakistan realize the transformation of energy structure and consolidate the achievements of fiscal reform.

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