Pakistan has formally requested the revival of its $1.2 billion annual Saudi oil facility on deferred payments, concurrently pushing for a $6.7 billion concessional oil financing arrangement spread out over 15 years. The macroeconomic maneuver is designed to drastically reduce immediate pressure on the sovereign’s foreign exchange reserves and strictly manage its mounting external financing requirements.
Federal Minister for Finance and Revenue Muhammad Aurangzeb presented the proposal directly to Saudi Fund for Development (SFD) Chief Executive Officer Sultan Abdulrahman Al-Marshad. The bilateral intervention occurred on the sidelines of the World Bank-International Monetary Fund annual meetings in Bangkok, Thailand. While the Ministry of Finance omitted the specific oil mechanism from its official documentation, reports indicate Riyadh is currently evaluating the request.
“Islamabad is now seeking a longer-term facility to reduce its immediate financing needs and cushion the impact of elevated international oil prices amid the Middle East conflict.”
Pakistan’s preceding deferred oil payment framework, which was ratified in February 2025, officially expired in April 2026. According to Ministry of Economic Affairs officials, that specific arrangement carried a rigid 6% interest rate. Since 2019, Saudi Arabia has injected approximately $6.7 billion in oil financing into Pakistan through a series of successive short-term deferred payment cycles.
The strategic shift toward a 15-year maturity profile correlates directly with a severe surge in energy procurement costs. During the previous fiscal year, Pakistan’s total petroleum import bill swelled 5.8% to $16.8 billion, driven by crude oil imports that spiked 32% to $7.2 billion. Furthermore, the cost of crude imports surged an additional 40% during July and August of the current fiscal year.
The International Monetary Fund (IMF) has calculated Pakistan’s gross external financing requirements at nearly $30 billion for the fiscal year 2028, compelling the government to hunt for extensive, long-term debt rollovers. Crucially, the IMF’s third staff-level report completely excluded projected inflows from any Saudi oil facility for FY27 and FY28.
Concurrently, Saudi Arabia maintains $3 billion in short-term financing deposited through the SFD, a lifeline that was officially rolled over for an additional three months in July.
Beyond the immediate oil facility, Aurangzeb and Al-Marshad negotiated the expansion of bilateral trade, private-sector corporate integration, domestic refinery upgrades, and the finalization of a “bilateral investment protection agreement”. Both delegations audited the operational status of existing SFD-funded infrastructure projects and initiated frameworks for a “new pipeline of investments,” with the SFD strictly reaffirming its institutional mandate to support Pakistan’s economic stabilization.