PAKISTAN’S latest financial relief from Saudi Arabia has arrived at a critical moment. Not only has Riyadh pledged an additional $3bn in deposits, it has also rolled over its existing $5bn facility for three years until 2028. The move has come at a time when Pakistan’s meagre international reserves face increased pressure due to the UAE’s refusal to extend its $3.5bn debt and repayment of the $1.4bn Eurobond amid global oil price volatility triggered by the Middle East crisis. It will help Islamabad meet its minimum reserve requirements under the IMF programme, curb speculation about exchange rate stability and signal continuity to the markets. In this sense, the finance minister is justified in calling the Saudi support “timely and critical”.

However, while the Saudi gesture must be appreciated, it offers short-term reprieve for a country facing perennial dollar shortages amid years of plunging foreign private and official inflows and a burgeoning trade deficit due to stagnating exports. For years, Pakistan has managed its external account through bilateral debt rollovers, remittances and emergency financing from the IMF and other multilaterals. While these inflows have helped buy time and averted default, they have failed to push policymakers to set their house in order by boosting productivity, expanding export capacity, creating jobs and strengthening the country’s external position. Instead, they simply serve as stopgap measures to maintain headline reserve numbers and avoid default risks. This model works only as long as geopolitical goodwill holds. The recent inability to secure a UAE rollover — the first such instance in seven years — is, in fact, a warning sign. Bilateral partners may continue to assist, but their support is neither guaranteed nor unconditional. If anything, the UAE’s recall of its deposits and our increasing dependence on Riyadh to fill the gap exposes a deeper structural vulnerability that policymakers continue to ignore. Overreliance on such arrangements injects uncertainty into our external financing framework. As things stand, each new deposit or rollover postpones rather than resolves the imbalance. Without addressing the root causes — weak exports, negligible FDI and overdependence on remittances — Pakistan risks remaining trapped in a cycle where financial stability depends less on its own economic strength and more on external goodwill. Bilateral support may be an indispensable part of Islamabad’s external financing mix in the short to medium term. However, it cannot serve as the economy’s long-term mainstay.

Published in Dawn, April 17th, 2026

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