As Pakistan negotiates an aid package with the International Monetary Fund, Saudi Arabia has agreed to increase its deposit at Pakistan's central bank to $3 billion.
Pakistan will get $1 billion in oil products from the world's top oil exporter over the next ten months.
The board of the International Monetary Fund is scheduled to meet this month to approve the disbursement.
The International Monetary Fund agreed last month to increase its loan package by $1 billion to $7 billion, but only if Pakistan gets more financial support from other countries.
A senior official in Pakistan said that Saudi Arabia had agreed to roll over its deposits in Pakistan's state bank reserves.
The possibility of Pakistan being able to borrow up to $2.8 billion against Riyadh's quota of SDRs at the fund was discussed.
Pakistan's borrowing from the International Monetary Fund will increase by $2.8 billion once finalized. The official said that this gesture would be very important.
Saudi Arabia and the International Monetary Fund didn't say anything.
Pakistan could be at risk of a default as it struggles with a widening current account deficit and a depreciating currency due to soaring commodity prices and tighter credit conditions, according to investors.
Russia's invasion of Ukraine in February caused a surge in global energy and food prices, causing the country's foreign exchange reserves to fall to $9 billion. The outlook for Pakistan was revised to negative from stable last month because of a significant decline in the country's external solvency.
If the International Monetary Fund approves the deal, analysts warn that Pakistan will need to push economic reforms as it has failed to plug gaps in its fiscal framework. The proportion of the population that pays income tax has not been increased.
Pakistan seems to have a financing issue. There is a solvency problem. Kardar was a former governor of Pakistan's central bank. Pakistan needs to reduce its expenditures a lot.
Pakistan is at a challenging economic juncture, according to the International Monetary Fund.
Domestic demand to unsustainable levels was caused by a difficult external environment and procyclical domestic policies.
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