Saudi Arabia rolls over $3 billion deposit for Pakistan again, Aurangzeb says

Saudi Arabia has rolled over its $3 billion financial support to Pakistan for a further period, Finance Minister Muhammad Aurangzeb told reporters at Parliament House on Wednesday, ProPakistani reported. The money is a deposit the kingdom keeps with the State Bank of Pakistan, and the rollover means Pakistan does not have to repay it when it falls due.

What Aurangzeb said

• The repayment has been deferred "for an appropriate period" after talks between the two governments. He did not give the new maturity date.
• He had a productive meeting with his Saudi counterpart.
• Pakistan does not need any additional financial assistance from Saudi Arabia at present.
• Foreign exchange reserves are enough to cover about three months of imports.
• The government is working to spread out external debt repayments so that they do not bunch up in any one year.

Why a rollover matters

A $3 billion repayment would take a large share of the State Bank's reserves in one go. Rolling it over keeps that money on the books, which supports the rupee, keeps Pakistan inside the reserve targets agreed with the IMF, and avoids new borrowing at higher rates to repay an old loan. Saudi Arabia, China and the UAE have repeatedly rolled over deposits like this in recent years, and the IMF counts on such rollovers when it reviews Pakistan's financing.

For readers, the effect is indirect but real. A steady reserve position is one reason the dollar has stayed near Rs 276.7 in the interbank market (dollar rate today). It also matters for the many Pakistanis working in Saudi Arabia and their families at home: the riyal is at about Rs 73.79 (SAR to PKR today), and you can check what a transfer is worth with the currency converter.

The wider picture this week

The rollover comes as oil fell to its lowest since August, which helps the import bill (oil story). Pakistan also offered Saudi Arabia tax-free oil storage away from the Strait of Hormuz last week (our story).

What is not yet known

The finance ministry has not published the new maturity date or any change in the rate Pakistan pays on the deposit. We will add both when they are announced.