ISLAMABAD (special crosspondent) – Pakistan has formally requested a $6.7 billion concessional oil financing facility from Saudi Arabia, proposing a 15-year repayment period, a 1% annual interest rate, and a five-year grace period to ease pressure on the country’s foreign exchange reserves and reduce the burden of oil imports. The Ministry of Economic Affairs confirmed the development, noting that discussions with Saudi authorities are currently underway.

According to reports, the proposal aims to strengthen the country’s external financial position. This initiative follows recent high-level engagements, including discussions held by Finance Minister Muhammad Aurangzeb, who recently engaged in critical economic cooperation talks, alongside Power Minister Awais Leghari and their Saudi counterparts. The meetings centered on expanding bilateral cooperation in energy, investment, and finance, reaffirming a commitment to a long-term strategic economic partnership.

Impact on Macroeconomic Stability

The Ministry of Finance indicated that if approved, the facility would allow Pakistan to finance oil imports on highly concessional terms, significantly reducing the immediate demand for foreign exchange. Economists note that energy imports represent one of the largest drains on the national treasury. By securing this arrangement, the government aims to lessen its reliance on expensive commercial financing and bolster the balance of payments.

The move is part of a broader push to manage national finances, similar to recent government efforts such as when the Finance Minister discussed economic reforms with international stakeholders to ensure long-term fiscal health. Should this facility be finalized, it would mirror previous instances of Saudi support, including past deferred oil payment facilities provided to assist Islamabad during periods of financial tightening.

Status of Negotiations

The government clarified that the proposal remains in the negotiation phase and has not yet been finalized. Formalized agreements will only be announced following a comprehensive understanding between both nations. As the administration continues to seek diverse avenues for growth, it remains focused on strengthening ties with key allies to ensure sustainable energy security, an effort paralleled by the country’s ongoing advocacy for global economic and technological equity.