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.

Ministry Confirms Ongoing Financial Negotiations

The Ministry of Economic Affairs confirmed the development, noting that discussions with Saudi authorities are currently underway. According to reports, Pakistan has sought the concessional oil financing package under these specific terms to strengthen its external financial position and support energy imports. This move aligns with broader efforts to stabilize the national economy, similar to how the government is engaging in Pakistan-China economic ties to ensure long-term sustainability.

Bilateral Economic Cooperation Discussions

The proposal was formally discussed during a high-level meeting between Finance Minister Muhammad Aurangzeb, Power Minister Awais Leghari, and the Saudi Finance Minister. The dialogue focused on expanding bilateral cooperation in the sectors of energy, investment, finance, and the broader economy, with both sides reaffirming their commitment to strengthening their long-term economic partnership. These discussions highlight the proactive measures taken by the current administration, much like recent efforts by Finance Minister Muhammad Aurangzeb who met with British High Commissioner Jane Marriott to bolster international financial cooperation.

Economic Impact and Stability

According to the Ministry of Finance, if approved, the facility would allow Pakistan to finance oil imports on highly concessional terms, significantly reducing the immediate demand for foreign exchange. Officials anticipate this arrangement will alleviate pressure on the country’s foreign exchange reserves, improve the balance of payments, and lessen reliance on expensive commercial financing. Economists emphasize that as energy remains one of the country’s largest import expenses, such a facility would improve external liquidity and provide greater macroeconomic stability. The government continues to explore diverse avenues for growth, ranging from regional infrastructure projects like those overseen by the Federal Minister Abdul Aleem Khan to strategic bilateral funding.

Status of the Proposed Facility

The government clarified that the proposed $6.7 billion concessional oil financing facility has not yet been finalized. Pakistan has submitted its proposal to the Saudi government, and negotiations are continuing. Any formal agreement will be announced only after both sides reach a final understanding.