The federal government on Monday signed an agreement with the Saudi Fund for Development (SFD) to defer by one year a $1.2 billion payment on oil imports.

State broadcaster PTV showed the signing ceremony between a delegation of the fund led by its CEO Sultan Bin Abdul Rehman Al Marshad and Prime Minister Shehbaz Sharif.

The premier welcomed the signing of the oil import financing facility, the Prime Minister’s Office (PMO) said in a statement. Pakistan will receive the oil on deferred payment for one year, it said.

“This project will strengthen Pakistan’s economic resilience by securing a stable supply of petroleum products while reducing immediate fiscal burdens,” the PMO said.

It said the fund would provide an amount of $41 million for a water supply scheme to help access clean drinking water for 150,000 people in Khyber Pakhtunkhwa.

Petroleum products from Saudi Arabia make up a major chunk of Pakistan’s import bill. The Saudi facility to defer the payment can help Islamabad boost its foreign reserves ahead of the first review of a $7bn bailout from the International Monetary Fund in March.

Finance minister shares economic update with SFD

Finance Minister Muhammad Aurangzeb also shared updates on Pakistan’s macroeconomic stability, highlighting improvements in key economic indicators, in a meeting with the SFD CEO.

The minister expressed gratitude for the longstanding partnership between Pakistan and Saudi Arabia, emphasising the importance of Saudi Arabia’s continued support in funding and investment, which he said had significantly contributed to Pakistan’s economic growth.

He recalled his recent meeting with Saudi Minister of Finance Mohammed bin Abdullah Al-Jadaan in Davos and the latter’s invitation to Pakistan to attend the first edition of a high-level annual conference later this month on challenges and opportunities facing emerging market economies.

The finance minister expressed his anticipation for the conference, noting the valuable insights he hoped to gain from the event and the leadership of Saudi Arabia in implementing Vision 2030.

The SFD CEO lauded the progress of Pakistan in terms of macroeconomic stability and growth, which he said opened up numerous multi-purpose investment opportunities across various sectors.

He particularly noted the potential for further collaboration between Pakistan and Saudi Arabia, inviting investors from the kingdom to explore these emerging opportunities.

He acknowledged the valuable contributions of Pakistanis in the development of Saudi Arabia, recognising them as the largest foreign workforce in the Kingdom.

He expressed Saudi Arabia’s need for a skilled workforce to meet the demands of its growing market. To address this, he proposed a partnership with relevant government ministries and departments in Pakistan to offer training programmes for young Pakistanis in modern and relevant skill sets to meet the labour market demands in Saudi Arabia.

The meeting underscored the strong ties between Pakistan and Saudi Arabia and set the stage for further economic collaboration with a focus on investment, workforce development and expanding bilateral cooperation.