Saudi Arabia will provide $3 billion in additional financial support to Pakistan to help it bridge a funding gap linked to an upcoming debt repayment to the United Arab Emirates.

Pakistan’s Finance Minister Muhammad Aurangzeb said the funding comes alongside Riyadh’s decision to extend the rollover of a separate $5 billion deposit for a longer period.

A Saudi Ministry of Finance spokesperson confirmed the move, saying the deposit would support Pakistan’s balance of payments.

Pressure from UAE Repayment

Pakistan faces a $3.5 billion repayment to the UAE this month, placing strain on its foreign exchange reserves, which stood at about $16.4 billion as of March 27.

The repayment amounts to roughly 18% of those reserves.

Under its $7 billion programme with the International Monetary Fund, Pakistan is targeting foreign exchange reserves of more than $18 billion by June.

Deepening Strategic Ties

The latest support underscores strengthening ties between Riyadh and Islamabad, reinforced last year by a mutual defence pact treating aggression against either country as an attack on both.

Saudi Finance Minister Mohammed Al-Jadaan visited Pakistan recently in what officials described as a show of economic backing.

Pakistan’s finance ministry said the support comes at a critical time and would help reinforce reserves and strengthen the country’s external account.

Market Reaction and Broader Options

Pakistan’s international bonds rose following the announcement, with longer-dated maturities reaching their strongest levels since late February.

Aurangzeb said all financing options remain under consideration, including Eurobonds, loans and commercial debt.

Ongoing Support from Riyadh

Saudi Arabia has repeatedly supported Pakistan during periods of economic stress. In 2018, Riyadh announced a $6 billion package, including a $3 billion deposit and $3 billion in deferred oil payments.

Regional Role and Security Cooperation

Pakistan has also emerged as a key mediator between the United States and Iran amid efforts to end the Middle East conflict.

Last week, Pakistan deployed fighter jets and support aircraft to Saudi Arabia following Iranian strikes on key Saudi energy infrastructure.

(with inputs from Reuters)