RIYADH — Pakistani Prime Minister Shehbaz Sharif announced on Wednesday that his country had successfully repaid $3.5 billion of its mandatory bilateral debt, saying that this achievement was made possible because of the pivotal support extended by Saudi Arabia. He thanked Custodian of the Two Holy Mosques King Salman and Crown Prince and Prime Minister Mohammed bin Salman for the critical support that contributed to bolster its economy.
Sharif confirmed the stability of foreign exchange reserves at their current level despite the payment of international obligations. “This repayment did not affect the stability of foreign exchange reserves but rather strengthened market confidence in Pakistan’s ability to meet its international obligations,” he said.
On April 16, Saudi Arabia had announced granting a financial support amounting to $8 billion to boost Pakistan’s economic stability. This was in line with the directives of King Salman and Crown Prince Mohammed bin Salman.
Saudi Arabia has continued its support to enhance Pakistan’s economic stability by extending the term of an existing $5 billion deposit at the State Bank of Pakistan and announcing an additional deposit of $3 billion. This assistance aimed at supporting Pakistan’s economy and strengthening its resilience amidst evolving global economic challenges, and comes in accordance with the leadership’s directives to strengthen the bonds of brotherhood between the two countries.
Last Friday, the State Bank of Pakistan announced that Islamabad had completed the repayment of $3.45 billion of its deposits to the UAE, with the final tranche of $1 billion being paid. The bank had previously announced the receipt of the $3 billion Saudi deposit. This comes after the UAE asked Pakistan to return funds it deposited in the Pakistani central bank in 2018 to bolster its foreign exchange reserves.
This substantial support aims to enable the Pakistani economy to withstand global economic changes and enhance its financial resilience, which will positively impact the living conditions of the Pakistani people. It also reaffirms the Kingdom’s unwavering and continuous support for Pakistan in all circumstances, reflecting the deep bonds of brotherhood that unite the two leaderships and peoples.
In an address to the Cabinet, Sharif clarified the current financial situation, stating: “Our mandatory external debt (approximately $3.5 billion in bilateral loans) has been repaid. Our foreign exchange reserves are stable at their current level, and we have fulfilled our obligations and repaid our debts.”
These developments form a cornerstone of Pakistan’s relationship with international institutions. The stability of liquid reserves at approximately $20.6 billion (of which $15.1 billion is held at the central bank) strengthens Islamabad’s negotiating position with the International Monetary Fund. Pakistan’s success in repaying its bilateral debt, while simultaneously adhering to the IMF’s financing program requirements, is seen as an international vote of confidence in the Pakistani economy’s ability to meet its immediate and future financial obligations.
The central bank noted that its success in managing the outflows to repay these billions was achieved without causing a shock to the value of the local currency. The Pakistani rupee remained stable thanks to supportive deposits and prudent monetary policies.
Sharif explained that this repayment did not come at the expense of monetary stability. Rather, it resulted from a coordinated plan between the Ministry of Finance and the central bank to ensure that foreign exchange reserves remained at safe levels, which strengthens Pakistan’s position in its ongoing negotiations with international financial institutions.
Regarding the role played by Saudi Arabia in securing this financial transition, the Pakistani prime minister expressed his country’s deep appreciation, saying, “We are extremely grateful to Custodian of the Two Holy Mosques King Salman and Crown Prince Mohammed bin Salman as they played a pivotal role in this matter. I am confident that these major issues will also be resolved, and that Pakistan’s peace efforts are continuing unabated and relentless.”
Sharif noted that this Saudi support was not merely a temporary financial gesture, but rather a reflection of the depth of historical ties. “Just as we have strengthened mutual cooperation by removing obstacles at both the joint and institutional levels, positive results have emerged,” he added.
It is noteworthy that this latest Saudi move is not unprecedented. In 2018, the Kingdom provided a $6 billion support package, which included a $3 billion deposit in the State Bank of Pakistan, along with deferred oil payment facilities of the same value.
Source: Saudi Gazette