Saudi Arabia has agreed to provide Pakistan with an additional $3 billion in support to help the country bridge a multi-billion dollar gap in its finances. This move comes as Pakistan faces a $3.5 billion repayment to the United Arab Emirates this month, which has put a strain on its foreign exchange reserves.
The extra funding for Pakistan comes on top of Riyadh extending the rollover arrangement for an additional $5 billion deposit for a longer period. Pakistan Finance Minister Muhammad Aurangzeb told reporters in Washington that the move underlines a deepening relationship between Riyadh and Islamabad.
Pakistan faces a significant challenge in maintaining its foreign exchange reserves, which stood at about $16.4 billion as of March 27. The repayment to the UAE amounts to roughly 18% of those holdings. Under Pakistan's $7 billion IMF program, the country is targeting foreign exchange reserves of more than $18 billion by June.
Saudi Finance Minister Mohammed Al-Jadaan was in Pakistan on Friday in what one source familiar with the matter described as a show of economic support. The finance ministry said in a statement that the support comes at a critical time for Pakistan's external financing needs and would help reinforce foreign exchange reserves and strengthen the country's external account.
