Saudi Arabia extends $3B financing rollover to Pakistan

Saudi Arabia has extended the rollover of its $3 billion financing to Pakistan for a “reasonable period,” Pakistan's Finance Minister Muhammad Aurangzeb said Wednesday.

The financing was provided in April to help Pakistan meet a $3.5 billion debt repayment to the United Arab Emirates.

The development comes as prospects of a $10 billion US backstop facility appear to have waned.

“It has been extended and for a reasonable period. You don’t need to worry as to for how long given the kind of strategic relationship we have,” Auran­gzeb told reporters in Islamabad.

The financing facility, that helped Pakistan shore up its declining foreign reserves following the UAE's sudden move, matured on Oct. 31 under its three-month term.

Pakistan repaid $3.5 billion in debt to the UAE in April following a request from Abu Dhabi for immediate repayment.

Earlier, Riyadh extended a separate $5 billion facility until 2028.

Aurangzeb said he had a very good meeting with his Saudi counterpart, Mohammed Al-Jadaan, on the sidelines of recent World Bank-International Monetary Fund meetings in Bangkok.

About the prospects of the $10 billion Exchange Stabilization Support Facility (ESSF) requested from the US in July this year, he said: “What we asked for back in July and were looking at was the market access."

"We have got the market access,” he said, referring to the $3 billion bond Pakistan issued in September against orders worth $6 billion.

“If that (ESSF) materializes, fantastic, it will be a liquidity support facility. Otherwise, we have plans for further Eurobond issuance, Panda bond issuance and rupee-linked dollar-settled bond,” the minister said.

Pakistan is targeting a reduction of $4 billion in external debt during the current fiscal year and $3.5 billion next year, compared with $4.5 billion in the last fiscal year.

Pakistan's liquid foreign exchange reserves total approximately $26.86 billion. The State Bank of Pakistan holds $21.47 billion, while commercial banks hold approximately $5.41 billion.