Pakistan’s external sector pressure has eased as Saudi Arabia rolls over a $5 billion debt for three years.
State Bank of Pakistan (SBP) Governor Jameel Ahmad confirmed the development while speaking to a private media outlet. “Three-to-five-year rollovers of short-term debts are part of the government’s strategy to delay repayments and secure breathing space before boosting the economy.”
Due to the extension of the $5 billion cash deposits until December 2028, Pakistan’s gross external financing requirements dropped to $21.5 billion for the current fiscal year.
Pakistan holds a total of $8 billion in cash deposits from Saudi Arabia, including $3 billion secured in April.
Out of the total amount, $5 billion was previously extended on an annual basis before the kingdom granted the three-year extension.
Ahmad noted that interest costs on foreign debt fell by nearly half a billion dollars, contributing to the lower gross financing requirements. External gross financing requirements represent the funds needed to pay off debt obligations and cover the current account deficit.
The International Monetary Fund (IMF) has projected $30 billion in external financing requirements for the next fiscal year.
Breaking down the $21.5 billion requirement for the current fiscal year, cash deposits account for $7.3 billion, while foreign commercial loans maturing this year total $3.5 billion. Pakistan also owes $250 million to Kuwait in cash deposits, which remain rolled over.
Ahmad revealed that the central bank purchased $9 billion from the open market to build foreign exchange reserves, bringing total central bank purchases over the past three years to $28 billion.
