Saudi Arabia: Pakistan’s Lifeline for Affordable Foreign Loans

Saudi Arabia provides Pakistan with affordable loans at a 4% interest rate, lower than Chinese loans and foreign commercial borrowing. These loans, essential for maintaining Pakistan's foreign reserves, are regularly rolled over. Despite international pressures, Saudi loans remain a financial lifeline for Pakistan's economic stability.

Saudi Arabia continues to be Pakistan's primary source of low-interest foreign loans, offering annual rates of 4%, according to a report by The Express Tribune. These loans, cheaper compared to China's and commercial borrowing, play a significant role in supporting Pakistan's economy.

The Saudi loans, contracted originally for a year, have been rolled over without additional fees. A USD 2 billion deposit facility is due in December, and another USD 3 billion will mature next June, mainly to bridge the financial gap under IMF conditions.

While Saudi Arabia offers favorable conditions, Pakistan's heavy reliance on multilateral banks is increasing due to IMF programs' diminishing returns. With Saudi, UAE, and Chinese cash deposits forming the core of its reserves, Pakistan's debt management strategy hinges on these key bilateral relationships.

(With inputs from agencies.)