Pakistan has signed a major agreement with the Saudi Fund for Development (SFD) to defer a $1.2 billion oil payment for one year. This deal will provide much-needed relief to the country’s economy by ensuring a steady oil supply while easing immediate financial pressure.
Prime Minister Shehbaz Sharif and SFD Chief Executive Officer Sultan Abdulrahman Al-Marshad witnessed the signing ceremony in Islamabad. In addition to the oil payment deferral, both sides signed a concessional loan agreement worth $41 million for a gravity-flow water scheme in Mansehra.
Boosting Economic Stability
Under the Oil Import Financing Facility, Pakistan will continue importing petroleum products from Saudi Arabia on deferred payments. The agreement aims to strengthen economic stability by securing fuel supplies without adding to immediate financial burdens.
Petroleum imports account for a major portion of Pakistan’s expenses, making this deal crucial. It comes at a critical time as Pakistan prepares for the first review of its $7 billion IMF bailout in March. By reducing short-term financial stress, the agreement can help Islamabad maintain foreign exchange reserves.
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Water Scheme for Mansehra
The second agreement focuses on a gravity-flow water scheme in Mansehra, which will benefit around 150,000 residents. The project, funded through a $41 million concessional loan, aims to improve access to clean water in the region. This initiative aligns with Pakistan’s broader efforts to enhance infrastructure and support local communities.
Strengthening Bilateral Ties
Following the signing ceremony, the SFD delegation met with Prime Minister Shehbaz Sharif to discuss ongoing development projects. These include the Mohmand Multi-purpose Hydropower Project, Golan Gol Hydropower Project, and Malakand Regional Development Project.
The prime minister acknowledged Saudi Arabia’s long-standing support in critical sectors like energy, health, infrastructure, and education. He emphasized the importance of accelerating new projects, particularly in green energy and infrastructure, to drive economic revival.
Saudi Commitment to Pakistan
SFD’s CEO assured early processing of Pakistan’s proposed projects and reaffirmed Saudi Arabia’s commitment to continued financial and developmental assistance. The Saudi leadership, under the royal family, remains dedicated to supporting Pakistan’s economic growth and stability.
This agreement marks another step in the deep-rooted partnership between Pakistan and Saudi Arabia. It not only provides immediate relief but also paves the way for long-term economic cooperation and infrastructure development.
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