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Saudi Arabia supports Pakistan’s economy chiefly by placing deposits with the State Bank of Pakistan. The pact signed on 7 August is a separate document from the financing, and no public statement links the two. On 15 April, Finance Minister Muhammad Aurangzeb announced that the kingdom had committed $3bn in additional deposits and would extend an existing $5bn deposit on longer terms, no longer subject to an annual rollover. The Saudi Press Agency confirmed the package the following day, and the State Bank of Pakistan confirmed receipt of $2bn on the 15th.
A deposit of this kind places foreign currency with the central bank, where it counts towards reserves and is repayable at maturity. The length of the term therefore matters as much as the amount, and the move away from an annual rollover was the most visible change in April.
The immediate need was a debt falling due. Pakistan owed the United Arab Emirates $3.5bn in matured deposits before the end of April. It was working under a $7bn IMF programme, had reached an initial agreement in March to receive $1.2bn from it, and was targeting reserves above $18bn by June. Aurangzeb said Saudi support, together with growing international confidence, gave momentum to the economy and the external account. IMF chief Kristalina Georgieva told him that Pakistan’s implementation of the programme had maintained macroeconomic stability. The deposit sits inside an IMF-monitored financing plan.
The $3bn was extended initially for three months, and on 17 July Saudi Arabia rolled it over, Daily Pakistan reported. Under commitments made to the IMF, Saudi Arabia, China and the UAE had pledged to keep $12.5bn in deposits with the central bank until September next year. The UAE has since scaled back its support, and Saudi Arabia has stepped in to bring its overall exposure to $8bn, making it Pakistan’s most significant financial partner. Three weeks later, Prime Minister Shehbaz Sharif signed the Mecca Joint Defence Agreement. Neither government has described the sequence as a bargain.
The statements from both sides are economic and fraternal in tone. Aurangzeb thanked Crown Prince Mohammed bin Salman, Finance Minister Mohammed Al-Jadaan and the Saudi vice finance minister for their continued support. The Saudi statement said the support reflected its leadership’s commitment to strengthening the bonds of brotherhood between the two countries and to fostering Pakistan’s economic growth. Neither mentions defence.
Other parts of the relationship are documented elsewhere. Pakistani forces are stationed in Saudi Arabia under a long-standing partnership, and in April Pakistan sent fighter jets and support aircraft to the kingdom after Iranian strikes on Saudi energy infrastructure, Reuters reported. Saudi Arabia has repeatedly stepped in to support Pakistan in periods of economic stress.
The pact also has a commercial dimension. It opens Saudi financial markets to the defence industries of Turkey and Pakistan, both of which have manufacturing capacity beyond what their economies can sustain. Turkey’s defence ministry has said the cooperation would aim at joint development and production, technology cooperation and sustainable maintenance and logistics. The scale of the partners explains the structure: Saudi Arabia’s 2026 military budget is $63.9bn against Turkey’s $51.4bn and Pakistan’s $9.1bn, while Pakistan’s active force of 660,000 is the largest of the three.
Pakistan’s other major economic relationship is with Iran. Trade is above $3bn, with a $10bn target reaffirmed on 4 and 5 August, and Pakistan imports about 100 megawatts of Iranian electricity, with a second transmission line discussed on 6 August.
Hailing from Kashmir and based in New Delhi, Mehak Farooq is a journalist specialising in defence and strategic affairs. Her work spans security, geopolitics, veterans’ welfare, foreign policy, and the evolving challenges of national and regional stability.
