Saudi Arabia Rolls Over $5bn in Deposits, Easing Pakistan's Debt Pressure

ISLAMABAD: Saudi Arabia has rolled over its $5 billion deposits with Pakistan for an additional three-year period, as stated by top-level government officials on Wednesday, providing some relief to the country as it works out how to make debt payments to other countries during this fiscal year. The Finance Minister of Pakistan, Mr. Muhammad Aurangzeb, made the announcement along with the Governor of SBP, Mr. Jameel Ahmed.

According to the governor of SBP, the initiative by Saudi Arabia rolls over $5bn deposits directly for decreasing the burden on its external accounts, considering the fact that the country is facing a tough schedule of paying off its foreign debts. In an interview with media after attending the session of Senate Standing Committee on Finance, Ahmed talked about the development in favorable terms.

Ahmed stated that the debt servicing of Pakistan has decreased from $26.5 billion in FY 2024-25 to $21.5 billion in the present fiscal year 2026-27. This was due to several reasons such as lowering of interest rate internationally. Out of $21.5 billion of debt servicing amount, $3.5 billion would be used for paying interests in the present fiscal year.

Ahmed noted that out of the total debt service requirement of about $12 billion, $3 billion is from commercial borrowings which will be refinance and the other $7 billion is foreign debt obligations. Out of the total deposits of $12 billion, $8 billion are contributed by Saudi Arabia alone. This shows the significance of the role played by Saudi Arabia in the overall management of Pakistan’s foreign debt.

According to the SBP governor, there is going to be a need for rollovers for the deposits which are due in December 2026 and March 2027, so the existing rollover worth $5 billion is important but not sufficient for Pakistan to continue receiving financial assistance from Saudi Arabia. In July 2026, the first month of the fiscal year, Pakistan made foreign debt payments worth $2.2 billion, though Ahmed mentioned that the pressure to pay back loans was going to reduce till June 2027.

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Moreover, Ahmed stated that the total amount of money purchased by the central bank from the interbank market within the last three years amounted to $28 billion, out of which $9 billion was bought during the last financial year in order to create a shock-proof buffer for the economy.

Foreign exchange reserves in Pakistan totaled $22.6 billion as of July 17, 2026, which includes $17.2 billion reserves with SBP and $5.4 billion reserves with commercial banks. The reserves with the SBP have reached up to $18.4 billion as of July 3, 2026, however, due to heavy debt servicing and other external liabilities, reserves with the SBP fell.

On being queried about the expected increase in debt servicing costs expected by the IMF for the coming financial year 2027-28, Ahmed commented that the matter would be deliberated upon at a later point in time. Insofar as the ongoing financial year is concerned, however, Ahmed is confident that Pakistan feels comfortable paying its foreign debt service. It seems that the central bank is determined to continue concentrating on accumulating foreign exchange reserves in order to withstand any shock, especially that caused by a rise in global oil prices.