Pakistan signed an agreement with the Saudi Fund for Development to defer a $1.2 billion payment on the country’s oil imports for one year, the country’s prime minister office said. This move is aimed at supporting Pakistan’s economic recovery,
The decision comes at a critical time for Pakistan, as it prepares for the first review of a $7 billion IMF bailout package due in March. The deferred payment will help bolster Pakistan’s foreign reserves, alleviating fiscal pressure as the country navigates a challenging economic landscape.
The agreement, signed in Islamabad, was witnessed by Pakistan’s Prime Minister Shehbaz Sharif and SFD CEO Sultan Abdulrahman Al-Marshad. It is part of a broader economic partnership between Pakistan and Saudi Arabia, which has seen the SFD support over 40 projects valued at approximately $1.4 billion in various sectors such as energy, water, transportation, and infrastructure across Pakistan.
“This project will strengthen Pakistan’s economic resilience by securing a stable supply of petroleum products while reducing immediate fiscal burdens,” said Sharif’s office in a statement. Sharif also expressed his appreciation for Saudi Arabia’s ongoing commitment to Pakistan’s development, underscoring the importance of such agreements for strengthening the country’s economic foundations.
$41 million Water Supply project in Mansehra
In addition to the oil import financing deal, the two nations also finalized a $41 million concessional loan agreement for the construction of a Gravity Flow Water Supply Scheme in Mansehra, a district in Khyber Pakhtunkhwa.
This scheme aims to provide clean drinking water to over 150,000 people in the region, addressing a critical need and improving access to vital resources. The project is expected to serve the local population until 2040, marking a significant step in improving water infrastructure in Pakistan.
The two agreements, totaling $1.61 billion, were signed by Dr. Kazim Niaz, Secretary of Pakistan’s Ministry of Economic Affairs, and Al-Marshad, on behalf of their respective governments. The ceremony was also attended by high-ranking Pakistani officials, including Deputy Prime Minister and Foreign Minister Ishaq Dar, along with Saudi Arabia’s Ambassador to Pakistan Nawaf bin Said Al-Malki.
SFD CEO Sultan Al-Marshad highlighted the growing economic ties between the two countries, particularly the role of Pakistan’s migrant workforce in Saudi Arabia’s economic development. He praised the progress Pakistan has made toward macroeconomic stability and expressed hope that this would open up new investment opportunities across various sectors.
At the event, Prime Minister Sharif emphasized the importance of the oil payment deferral in helping Pakistan navigate its economic challenges. “This agreement will secure a stable supply of petroleum products while helping reduce the fiscal pressure on Pakistan’s economy,” he stated.
Saudi Arabia’s financial assistance goes beyond infrastructure development. SFD has proposed a partnership to offer training programs aimed at equipping young Pakistanis with modern skills to meet the growing demand for skilled labor in Saudi Arabia, under its Vision 2030 initiative. With nearly 2.64 million Pakistanis working in the Kingdom, the need for skilled workers in industries ranging from construction to technology is becoming increasingly urgent.
This series of agreements marks a further strengthening of bilateral ties between Pakistan and Saudi Arabia, with both nations committed to deepening cooperation in areas critical to Pakistan’s economic growth and recovery.