Finance & Digital Economy | July 2026 | 4 min read
⚡ Quick Takeaways
⚡ Pakistan is seeking a $6.7bn oil facility from Saudi Arabia’s SFD at 1% interest with a 5-year grace period and 15-year repayment.
⚡ The previous oil facility carried a 6% interest rate — the new ask represents an 83% reduction in the rate.
⚡ Saudi cash deposits with Pakistan have risen to $8 billion as of early July 2026.
⚡ Brent crude has risen $15 per barrel since the new US-Iran hostilities began, threatening Pakistan’s import bill.
⚡ The IMF has not included the Saudi oil facility in its FY27–28 projected inflows — approval would provide upside to Pakistan’s external position.
Pakistan is in active discussions with Saudi Arabia for a $6.7 billion oil financing facility on terms that would represent a transformative improvement over previous arrangements — a 1% interest rate over 15 years versus the 6% rate on the last deal. The request comes as Middle East conflict threatens to sustain high oil prices and as Islamabad works to reduce the external debt burden before its IMF programme expires in September 2027.
| $6.7bn
Facility Sought Saudi Fund for Development |
1%
Interest Rate vs 6% on previous deal |
$8bn
Saudi Cash Deposits as of early July 2026 |
The Facility — Terms and Context
Pakistan is requesting a $6.7 billion oil financing facility from the Saudi Fund for Development on a 15-year repayment schedule with a five-year grace period and a 1% annual interest rate. The Ministry of Economic Affairs has confirmed the discussions are active at the ministerial level, though no agreement has been signed.
The contrast with the previous arrangement is stark. The last SFD oil facility — a $1.2 billion deal signed in February 2025 and expired in April — carried a 6% interest rate on a one-year deferred payment basis. The new request seeks a rate that is a sixth of the previous deal’s cost, a tenure 15 times longer, and a total facility size more than five times larger.
| Term | Previous Facility | New Request |
| Amount | $1.2 billion | $6.7 billion |
| Interest Rate | 6% | 1% |
| Tenure | 1 year (renewable) | 15 years |
| Grace Period | N/A | 5 years |
| Signed | February 2025 | Under negotiation |
| Expired | April 2025 | N/A |
| ℹ️ Why $6.7 Billion — The Historical Total The $6.7 billion figure matches the total SFD oil financing provided to Pakistan since 2019 — suggesting Pakistan is seeking to consolidate annually renewed short-term credit into a single long-term concessional facility at a fraction of the previous funding cost. |
Why Now — The Middle East Conflict Factor
The timing of Pakistan’s request is directly linked to the resumed US-Iran conflict. Brent crude prices have risen by $15 per barrel since the new phase of hostilities began, adding pressure to Pakistan’s already strained import bill. During July-May of FY2025–26, Pakistan imported $14 billion worth of petroleum products — and sustained high global prices will push that figure higher in FY2027.
Pakistan’s reserves remain sensitive to energy import costs. A 1% long-term oil facility would effectively insulate a large portion of the import bill from global price volatility for 15 years — a strategic hedge no market instrument could replicate at comparable cost.
| ✅ IMF Upside — Not Yet in the Baseline The IMF has not included the Saudi oil facility in its projected inflows for Pakistan for FY27 and FY28. If the deal is signed, it would represent upside to Pakistan’s external position that the Fund has not yet accounted for — improving the country’s reserve trajectory beyond what the current programme baseline assumes. |
The Broader Saudi-Pakistan Financial Relationship
Saudi Arabia has emerged as Pakistan’s most significant bilateral financial partner alongside China. Total Saudi cash deposits with Pakistan have risen to $8 billion as of early July 2026. The Kingdom also recently provided $3 billion in a short-term SFD deposit specifically to help Pakistan repay debt to the UAE — a targeted intervention that smoothed an external payment pressure point.
| Saudi Exposure to Pakistan | Amount / Detail |
| Cash deposits (SFD, as of Jul 2026) | $8 billion |
| Oil derivatives financed since 2019 | ~$6.7 billion (cumulative) |
| $3bn deposit for UAE debt repayment | Provided (recent) |
| Remittances to Pakistan from KSA (FY26) | $9.8 billion (24% of total) |
| New oil facility under negotiation | $6.7 billion at 1% / 15 years |
| ⚠️ $9.8bn in Remittances — Saudi Arabia’s Full Footprint Saudi Arabia is also the single largest source of remittances to Pakistan. Overseas Pakistanis in the Kingdom sent $9.8 billion home in FY2026 — 24% of Pakistan’s total $41.6 billion in remittances. The financial relationship between the two countries operates on multiple parallel tracks: deposits, oil credit, remittances, and now potentially a long-term concessional oil facility. |
The IMF Programme Linkage
The oil facility request sits within a broader Pakistani strategy to reduce external debt repayments before the current IMF programme expires in September 2027. Officials have said that if Pakistan can restructure Chinese energy debt repayments and secure concessional facilities from Gulf partners, the country may be able to exit the IMF programme without needing an immediate successor arrangement.
Finance Minister Aurangzeb and Power Minister Leghari met Saudi Finance Minister Al-Jadaan on Sunday — a meeting that almost certainly touched on the oil facility. The IMF has separately cited Saudi assistance as critical to Pakistan’s stabilisation, and Riyadh has been providing the Fund assurances about maintaining its deposits.
Disclaimer: This article is based on reporting by The Express Tribune and confirmation from the Ministry of Economic Affairs spokeswoman. The facility is currently under inter-governmental discussion and has not been formally signed. Figures cited are from official Pakistani and IMF sources.
