Pakistan’s Prime Minister Shehbaz Sharif announced on Wednesday that his country had successfully repaid $3.5 billion in mandatory bilateral debt, affirming that this achievement came thanks to the “pivotal” support of the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz, and Crown Prince Mohammed bin Salman.
He clarified that this repayment did not affect the stability of foreign exchange reserves; rather, it strengthened market confidence in Pakistan’s ability to meet its international obligations.
The Kingdom had announced the provision of substantial financial support to Pakistan, including the extension of the term of a previous $5 billion deposit and the provision of an additional $3 billion deposit, aimed at enhancing economic stability and addressing global changes.
On Friday, the State Bank of Pakistan announced that Islamabad had completed the repayment of $3.45 billion in deposits to the United Arab Emirates, settling a final tranche worth $1 billion. The bank had also announced that it had received the Saudi deposit worth $3 billion.
This came after the United Arab Emirates requested that Pakistan return the funds it had deposited in the State Bank of Pakistan in 2018 to bolster its foreign exchange reserves.
This qualitative support aims to enable the Pakistani economy to confront global economic changes and strengthen its financial resilience, in a way that positively reflects on the living conditions of the Pakistani people. It also reaffirms the Kingdom’s consistent and ongoing position of standing alongside Pakistan under all circumstances, embodying the sincere bonds of brotherhood between the leaderships and the peoples.
In an address before the cabinet, the Pakistani Prime Minister clarified the current financial situation, stating: “We have repaid our mandatory external debts (amounting to approximately $3.5 billion in bilateral loans). Our foreign exchange reserves are stable at their current level, and we have fulfilled our obligations and repaid our debts.”
These developments constitute a key pillar in Pakistan’s relationship with international institutions; the stability of liquid reserves at around $20.6 billion (including $15.1 billion held by the central bank) contributes to strengthening Islamabad’s negotiating position with the International Monetary Fund. Pakistan’s success in repaying its bilateral debts, alongside adherence to the requirements of the Fund’s financing program, is seen as a vote of international confidence in the Pakistani economy’s ability to meet its immediate and future financial commitments.
The central bank indicated that its success in managing the outflows required to repay these billions was achieved without causing any shock to the value of the local currency, as the Pakistani rupee remained stable thanks to supportive deposits and cautious monetary policies.
For his part, Sharif explained that this repayment did not come at the expense of monetary stability; rather, it resulted from a coordinated plan between the Ministry of Finance and the central bank to ensure that foreign exchange reserves remained at safe levels, which strengthens Pakistan’s position in its ongoing negotiations with international financial institutions.
Regarding the role played by the Kingdom in securing this financial passage, the Prime Minister expressed his country’s deep appreciation, saying: “We are extremely grateful to the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz, and His Royal Highness Crown Prince Mohammed bin Salman; they played a pivotal role in this matter. I am confident that these major issues will also be resolved, and Pakistan’s peace efforts continue uninterrupted and without relent.”
Sharif noted that this Saudi support was not merely temporary financial assistance, but rather a reflection of the depth of historical ties, adding: “Just as we have strengthened mutual cooperation by removing obstacles at both the joint and institutional levels, positive results have emerged from this.”
It is worth noting that this new Saudi move is not unprecedented. In 2018, the Kingdom provided a $6 billion support package, which included a $3 billion deposit in the State Bank of Pakistan, in addition to deferred oil payment facilities of the same value.
