Pakistan eyes over $6 billion in Saudi support as top foreign financier in FY26

Vehicles move past a shipping container yard along a road in Karachi, Pakistan, on June 10, 2025. (REUTERS/File)
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Updated 13 June 2025
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Pakistan eyes over $6 billion in Saudi support as top foreign financier in FY26

  • China, Pakistan’s largest trading partner, projected to be second-biggest lender with $4.37 billion
  • Budget documents also list smaller expected inflows from Kuwait ($21.4 million) and Oman ($5.14 million)

KARACHI: Saudi Arabia is expected to be Pakistan’s largest source of external financing in the upcoming fiscal year with over $6 billion in support as the South Asian country seeks to raise more than $20 billion from international lenders to uplift its fragile economy, official budget documents released this week showed.

In the 2025–26 fiscal year starting July 1, Pakistan aims to secure $6.46 billion from Riyadh, including $5 billion in time deposits, $1 billion in oil on deferred payments, and $46.4 million in economic assistance, according to the budget documents.

The financial support is intended to help stabilize the country’s external account and meet its balance of payments needs.

Islamabad has long relied on financial support from its Gulf and Chinese partners to shore up its foreign reserves and avoid default. In 2023, these inflows played a key role in helping Pakistan avert a sovereign debt crisis.

“The support from Saudi Arabia in the form of deposits and oil facility is undoubtedly the major source of the external stability,” said Shankar Talreja, head of research at Karachi-based Topline Securities.

Pakistan’s government unveiled a Rs17.6 trillion ($62 billion) federal budget on June 10, aiming to consolidate what it describes as fragile macroeconomic stability achieved under a $7 billion bailout loan from the International Monetary Fund (IMF).

Notably, Pakistan has not earmarked a specific amount under the International Monetary Fund (IMF) in its external financing estimates for 2025-26. The country is currently operating under a 37-month IMF Extended Fund Facility approved last year.

In total, Pakistan has budgeted for Rs5.78 trillion ($20.4 billion) in foreign assistance in FY26, including both loans and grants from bilateral and multilateral partners, to help shore up reserves and finance its current account. The country’s total external receipts for the year are budgeted at Rs20.3 trillion ($71.9 billion).

China, Pakistan’s largest trading partner and longtime ally, is projected to be the second-biggest lender after Riyadh with $4.37 billion, including $4 billion in “safe deposits,” a form of central bank support, and $37 million in economic assistance.

“China is a major bilateral partner… supporting Pakistan with both commercial loans and time deposits,” said Talreja. “Both types are refinanced and renewed annually.”

Pakistan’s multilateral lenders include the Asian Development Bank (ADB), World Bank, Islamic Development Bank (IsDB), Asian Infrastructure Investment Bank (AIIB), and others such as the United Nations, OPEC Fund, and International Fund for Agricultural Development (IFAD).

SMALLER LENDERS AND REMITTANCES

Besides Saudi Arabia and China, Pakistan will also seek smaller amounts of aid and financing from countries including the United States, France, Germany, Denmark, Italy, Japan, and South Korea, according to the budget documents, which also list smaller expected inflows from Kuwait ($21.4 million) and Oman ($5.14 million).

However, a long-delayed Saudi oil facility, initially expected last year, has yet to materialize. Media reports have suggested Riyadh has linked its final approval to progress on Saudi investment in Pakistan’s Reko Diq copper and gold mining project.

State media reported in September that Saudi Arabia had offered a 15 percent equity stake in the multibillion-dollar Reko Diq mine in Pakistan’s southwestern Balochistan province. The project, one of the world’s largest undeveloped copper-gold reserves, is operated by Canada’s Barrick Gold.

Islamabad also plans to raise $1.3 billion in commercial loans and $400 million through international bond issuances, though the finance ministry has not specified the sovereign guarantees or instruments.

Finance Minister Muhammad Aurangzeb has separately said the government aims to issue Panda bonds, yuan-denominated debt instruments issued in China, to raise around $200 million from Chinese investors to boost foreign exchange reserves.

In addition to official financing, Pakistan continues to benefit significantly from worker remittances, particularly from the Gulf region.

According to the Pakistan Economic Survey 2024–25, released this week, Saudi Arabia accounted for $7.4 billion in remittances in the last fiscal year, about 25 percent of the national total.

Remittances from all six Gulf Cooperation Council (GCC) countries — Saudi Arabia, the UAE, Qatar, Kuwait, Oman, and Bahrain — totaled $16.1 billion, or more than half of Pakistan’s total remittance inflows in 2024.

“In the GCC region, expanding Saudi mega-projects led to higher migrant employment, further contributing to inflows,” the economic survey said.

“It’s not just deposits and oil facilities helping Pakistan,” added Talreja. “Remittances from Saudi Arabia alone are a quarter of Pakistan’s total remittances.”

“Saudi Arabia is a key nation for Pakistan in terms of foreign inflows, whether in the form of remittances or economic assistance,” Sana Tawfik, head of research at Arif Habib Ltd. said.


Tirah Valley residents flee homes ahead of Pakistan’s planned anti-militant army offensive

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Tirah Valley residents flee homes ahead of Pakistan’s planned anti-militant army offensive

  • Families flee militant-hit region on days-long journeys amid bitter winter cold
  • Cash aid announced but displaced residents cite lack of evacuation planning

PAINDA CHEENA, Pakistan: In the rugged mountains of Pakistan’s Tirah Valley, long lines of tractor-trolleys and mini-pickups inched toward a registration camp earlier this month. 

The vehicles were stacked with bedding, food supplies and families escaping their homes as a military operation against militants looms in the conflict-striken northwestern region. 

At the Painda Cheena registration point, 60-year-old Hajji Muhammad Yousuf sat wrapped in a shawl, waiting with dozens of others after traveling nearly 40 kilometers from his village in Maidan Tirah, a journey that took four days instead of the usual few hours. He still faces another 66-kilometer trip to Bara, near the northwestern city of Peshawar, the provincial capital of Khyber Pakhtunkhwa. 

Like thousands of others, Yousuf is leaving behind a fully furnished home ahead of an expected security offensive in the volatile border region near Afghanistan.

“Today is our fourth night here,” Yousuf said. “We have left fully furnished houses behind ... There are no facilities, no amenities for us. We are facing great hardships.”

Families load their belongings onto vehicles in Pakistan’s Tirah Valley on January 15, 2026. (AN photo)

Officials say the evacuation could affect up to 20,000 families, marking a significant escalation in Pakistan’s campaign against the proscribed militant group Tehreek-e-Taliban Pakistan (TTP). Despite major military operations in the mid-2010s, Tirah Valley has remained a stronghold for insurgents, prompting authorities to plan what they describe as a targeted clearance.

The scale of displacement has placed acute pressure on limited local infrastructure. While the journey from Maidan Tirah to the registration point at Mandi Kas normally takes around two hours by vehicle, congestion and verification procedures have stretched the trip into days for many families.

“Last night, a woman died of hunger in Sandana,” Yousuf said. “There is no arrangement for medicine, no doctor, no food, no washroom. Women and children are facing problems.”

Displaced residents say they feel trapped between militant threats and state action.

“We ourselves are opposing terrorism, yet we do not understand why, if a Taliban comes in the evening and we give bread, the government comes in the morning asking why the bread was given,” Yousuf said. “In the end, we were forced to do this [to leave].”

RELIEF MEASURES

The Khyber Pakhtunkhwa (KP) provincial government has announced a compensation package for displaced families. Talha Rafi, assistant commissioner for Bara, said authorities had set up 15 biometric counters at the registration site.

“One person receives a one-time compensation of Rs255,000 ($911), and a monthly Rs50,000 ($179) is provided,” he said, adding that SIM cards were being issued to ensure digital disbursement of funds.

Families load their belongings onto vehicles in Pakistan’s Tirah Valley on January 15, 2026. (AN photo)

Provincial officials say the payments are intended to cover basic needs during displacement, though residents and tribal elders argue that cash alone cannot offset the absence of shelter, health care and transport arrangements during evacuation.

The evacuation has also exposed tensions between the provincial government and Pakistan’s military establishment over the use of force in the region.

“We have neither allowed the operation nor will we ever allow the operation,” KP Law Minister Aftab Alam Afridi said, arguing that past military campaigns had failed to deliver lasting stability.

“These people are our own people. They are also the people of this state, the people of this province. We will definitely take care of them,” he said, adding that the KP cabinet had approved what he described as “a large package” for the displaced families.

Federal authorities and the military have signaled a firmer stance. While Federal Information Minister Ataullah Tarar and the military’s public relations wing did not respond to requests for comment, military spokesperson Lt. Gen. Ahmed Shareef Chaudhry has previously defended security operations as necessary.

Families sittinng in vehicles with their belongings in Pakistan’s Tirah Valley on January 15, 2026. (AN photo)

In a recent briefing, Chaudhry said security forces carried out 75,175 intelligence-based operations nationwide last year, including more than 14,000 in Khyber Pakhtunkhwa, attributing the surge in violence to what he described as a “politically conducive environment” for militants.

Analysts say political divisions have allowed the TTP to regain ground. 

Peshawar-based journalist Mehmood Jan Babar said many militants now operating in Tirah are local residents who returned after refusing settlement offers in remote parts of Afghanistan.

“Whenever we have seen division at the national level, the Taliban have taken advantage of it,” he said.

But for families waiting in freezing conditions at Painda Cheena, such strategic calculations offer little comfort. Tribal elders accuse civil authorities of ordering displacement without adequate logistical planning.

“The government has, without any administrative arrangements, ordered these people to migrate,” said Muhammad Khan Afridi, an elderly local resident. “You yourselves are seeing what suffering these people are facing, what humiliation they are experiencing.”

As a January 25 evacuation deadline approaches, uncertainty dominates daily life for those uprooted.

“Bringing peace is in the government’s hands,” Yousuf said. “It is up to them whether they normalize the situation or drive us out again tomorrow.”