Riyadh rolls over $3bn as prospects of $10bn US facility wane

Pakistan has secured a $3 billion rollover from Saudi Arabia as the chances of a proposed $10 billion US backstop facility appear to have diminished, according to Finance Minister Muhammad Aurangzeb. The minister confirmed that Riyadh had extended the $3 billion financing it provided in April to bridge a gap arising from $3.5 billion in repayments to the United Arab Emirates.

Aurangzeb stated that the extension would provide additional support if secured, but emphasized that the facility was not essential. He also reported that the government planned further Eurobond, Panda bond, and rupee-linked dollar-settled issuances to reduce external debt. Aurangzeb denied seeking additional support from Pakistan and highlighted that foreign exchange reserves covered more than three months of imports, with the reserves expected to increase to a four-month cover by the end of the year.

Regarding the $10 billion Exchange Stabilisation Support Facility (ESSF) requested from the US in July, Aurangzeb clarified that the government had already obtained market access. He expressed hope that if the ESSF materializes, it would serve as a liquidity support facility. The finance minister also reported that Pakistan was targeting a $4 billion reduction in external debt for the current fiscal year and $3.5 billion for the following year, compared to $4.5 billion in the previous fiscal year.