ISLAMABAD: Saudi Arabia has agreed to defer a $1.2 billion payment on Pakistan’s oil imports by one year, the Saudi Fund for Development (SFD) said on Monday.
The Saudi facility to defer the payment can help Islamabad boost its foreign reserves ahead of the first review of a $7 billion IMF bailout due in March. The agreement comes as Pakistan continues to navigate a tricky economic recovery path and implement tough conditions attached to the IMF loan program.
Since the Fund’s establishment, SFD has supported more than 40 projects and programs valued at approximately $1.4 billion to finance energy, water, transportation and infrastructure projects in Pakistan.
“Following the directives of the Saudi wise leadership, and in the presence of the Prime Minister of the Islamic Republic of Pakistan H.E Shehbaz Sharif, #SFD CEO Mr. Sultan Al-Marshad signed today an agreement with Pakistan’s Secretary Ministry of Economic Affairs, Dr. Kazim Niaz, to finance oil derivatives worth USD 1.2 billion for #Pakistan,” the SFD said on X.
Sharif welcomed the signing of the agreement under which Pakistan will receive oil on deferred payment for one year, his office said.
“This project will strengthen Pakistan’s economic resilience by securing a stable supply of petroleum products while reducing immediate fiscal burdens,” it said in a statement.
Pakistan also finalized a loan agreement for a Gravity Flow Water Supply Scheme in Mansehra district of the northwestern Khyber Pakhtunkhwa province under which the SFD will provide $41 million to enhance access to clean drinking water for at least 150,000 people, according to Sharif’s office.
The SFD has also proposed a partnership with the Pakistan government to offer training programs for young Pakistanis and impart “modern and relevant” skills to meet labor market demands in Saudi Arabia.
Pakistanis constitute one of the largest migrant communities in Saudi Arabia with an estimated 2.64 million working there as of 2023. While 97 percent of them are blue-collar workers, there is a growing demand for skilled labor in the Kingdom as it seeks to modernize its economy under the Vision 2030 scheme.
