ISLAMABAD: The federal government has formally reached out to Riyadh with a massive $10 billion financial proposal, aiming to convert existing short-term debts into long-term loans while securing a vastly expanded oil facility. This move comes as Pakistan faces a ballooning import bill following the closure of the Strait of Hormuz and a surge in global Brent crude prices toward $120 per barrel.
Top officials from the Ministry of Finance confirmed that the proposal includes converting $5 billion in existing Saudi deposits—currently held by the State Bank of Pakistan—into a formal 10-year long-term facility. This restructuring would provide the “external financing guarantees” essential for clearing the ongoing third review of the IMF’s $7 billion program.
In a direct response to the energy crisis, Pakistan is also pushing to expand the Saudi Oil Facility (SOF) from its current $1.2 billion to $5 billion annually. Under this arrangement, the government is seeking a three-year deferred payment window for oil shipments, a significant upgrade from the current 12-month limit.
Adding a strategic layer to the negotiations, sources indicate that both nations are discussing a “Debt-for-Defense” swap. This potential deal would see Saudi Arabia offset approximately $2 billion of Pakistan’s debt in exchange for locally manufactured JF-17 Thunder Block III fighter jets. Such an agreement would operationalize the Mutual Defense Pact signed last year, allowing Islamabad to reduce its liabilities while boosting domestic defense exports.
The government has also proposed securitizing $10 billion in remittances from the Pakistani diaspora in the Kingdom as a guarantee for future international Sukuk bonds. This multi-pronged strategy aims to stabilize the Rupee and prevent a fresh wave of “petrol-induced” inflation from crashing the domestic market.