Pakistan asks Saudi Arabia to extend its $1.2bn Saudi Oil Facility by two years, while also seeking a $2bn UAE deposit rollover to ease pressure on FX reserves.
Pakistan has formally requested the Kingdom of Saudi Arabia (KSA) to extend the Saudi Oil Facility (SOF) for another two years beyond the expiry of the existing $1.2 billion arrangement. The move is aimed at easing pressure on the country’s foreign exchange reserves and supporting its ongoing economic stabilisation efforts.
According to reports, Islamabad has submitted a fresh request to Riyadh to keep the facility in place until the completion of Pakistan’s current International Monetary Fund (IMF) programme. The government is now awaiting a formal response from Saudi authorities, while also pushing for other external financing arrangements to stay on track.
How the Saudi Oil Facility Supports Pakistan
The existing Saudi Oil Facility is scheduled to expire next month. Under the current arrangement, Saudi Arabia provides around $100 million per month in deferred oil payments. Pakistan imports oil products and settles the monthly bills later under the facility, effectively receiving short-term financing support from Riyadh.
If the arrangement is renewed for another two years, Pakistan could receive up to $1.2 billion in additional support over the next year alone, with the overall facility potentially running until mid-2027. This would help Islamabad manage its fuel import bill without immediately draining its foreign exchange reserves, which remain under pressure despite recent improvements.
Deferred payment facilities are particularly important for a country like Pakistan, which relies heavily on imported energy and is vulnerable to swings in global oil prices. By spreading out its payments over time, the government can smooth cash flows and reduce the risk of sudden reserve drops that might unsettle markets or the IMF.
Link to the IMF Programme and Saudi Investments
The request to extend the Saudi Oil Facility is closely tied to Pakistan’s IMF programme, which demands that the country maintain adequate reserves and secure external financing to cover its funding gap. Having predictable support from Saudi Arabia strengthens Pakistan’s case that it can meet its external obligations without resorting to disruptive measures.
In parallel, a high-level Pakistani economic delegation is currently in Saudi Arabia to discuss broader economic cooperation and investment opportunities. Much of this engagement is taking place under the Special Investment Facilitation Council (SIFC), a platform designed to fast-track foreign investment in key sectors such as energy, mining, agriculture and infrastructure.
If Saudi Arabia agrees to the extension while also committing to new investments through SIFC, Pakistan could gain both short-term breathing space and longer-term growth prospects. However, any final decisions will depend on internal Saudi reviews, regional dynamics and Pakistan’s own progress on reforms agreed with the IMF.
Race Against Time to Secure UAE Deposit Rollover
Alongside the Saudi request, Pakistan’s economic team is also working urgently to secure the rollover of $2 billion in deposits from the United Arab Emirates (UAE) parked with the State Bank of Pakistan (SBP). Only around 12 days remain before the extended deadline on these deposits expires.
The UAE had earlier granted a one-month extension after the original maturities of $1 billion on 17 January and another $1 billion on 23 January 2026. Islamabad has now formally requested that the deposits be rolled over for one more year, until 16 February 2027.
If the rollover request is approved, the $2 billion will continue to count as part of Pakistan’s external buffers. If, however, the UAE decides not to extend the support, Pakistan would have to repay the full amount within the current month, putting fresh strain on the central bank’s foreign reserves and potentially complicating its commitments under the IMF programme.
What Is at Stake for Pakistan’s Economy
The outcome of both the Saudi Oil Facility extension and the UAE deposit rollover will play a crucial role in shaping Pakistan’s economic outlook over the next year. Together, they amount to $3.2 billion in potential support that can significantly influence the country’s ability to manage external payments and maintain currency stability.
For households and businesses, these high-level financing negotiations may feel distant, but they directly affect inflation, interest rates and the availability of imported fuel and raw materials. Stronger reserves can help stabilise the rupee and reduce the risk of sudden price shocks linked to currency depreciation.
For policymakers, the latest requests also underscore how dependent Pakistan still is on friendly countries for balance-of-payments support. While facilities from Saudi Arabia and the UAE offer vital relief, sustainable stability will require deeper structural reforms, higher exports, more foreign investment and better energy planning.
