Unable To Repay $2 Billion, Pakistan Offers Fighter Jet Deal To Saudi Arabia: Report

Last Updated:January 08, 2026, 13:03 IST

For Saudi Arabia, the talks come at a time when it is reassessing its defence partnerships amid uncertainty over the future role of the United States in the Middle East

Saudi Arabia has long played a stabilising role for Pakistan during periods of economic stress.

As Pakistan grapples with a deepening economic crisis and shrinking debt repayment capacity, the country is exploring an unconventional way to settle part of its mounting external debt. According to a Reuters report, Pakistan is in talks with Saudi Arabia to convert about $2 billion of Saudi loans into a military deal involving the JF-17 Thunder fighter jet, jointly developed with China. The discussions would mark a significant shift from traditional cash repayments to defence-based debt settlement, underscoring the financial stress facing Pakistan.

Pakistan has borrowed heavily from multiple countries over the years, with China and Saudi Arabia among its largest bilateral lenders. As foreign exchange reserves remain under pressure and the country continues under an International Monetary Fund (IMF) bailout programme, officials are looking for alternatives to outright cash repayment. Converting debt into a weapons deal is increasingly being viewed in Pakistan as a pragmatic solution.

According to Reuters, two Pakistani sources said the proposed arrangement centres on supplying the JF-17 Thunder, a lightweight, multi-role combat aircraft developed by Pakistan and China and manufactured domestically. One source estimated the total value of the potential deal at around $4 billion, with $2 billion offsetting the Saudi loan and the remaining amount covering weapons, electronic systems, spare parts and pilot training. The sources spoke on the condition of anonymity.

The negotiations come months after Pakistan and Saudi Arabia signed a mutual defence pact, significantly deepening their security relationship. Under the agreement, signed in September 2025, both countries agreed to treat an attack on one as an attack on the other, effectively elevating their long-standing military cooperation into a formal security alliance. The pact was concluded after Israeli strikes on what it said were Hamas targets in Doha unsettled the Gulf region, Reuters reported.

Pakistan Air Force chief Zaheer Ahmad Babar Sidhu recently visited Saudi Arabia for discussions on military cooperation, according to Saudi media, a trip now being closely linked to the ongoing talks over the fighter jet deal. Neither Pakistan’s military, nor its finance and defence ministries, responded to Reuters’ requests for comment. Saudi Arabia’s government media office also did not reply.

For Saudi Arabia, the talks come at a time when it is reassessing its defence partnerships amid uncertainty over the future role of the United States in the Middle East. Saudi Arabia has been preparing to seek advanced F-35 fighter jets from the US, a move opposed by Israel, leaving the outcome unclear. Against this backdrop, platforms such as the JF-17 offer a comparatively cheaper and quicker way to bolster air power, while also diversifying suppliers beyond the US.

Analysts say the JF-17’s appeal has grown in recent years because of its lower cost and ease of maintenance compared with Western aircraft. Reuters noted that Pakistan claims the jet has been tested in combat, including during last year’s intense fighting with India, the worst between the nuclear-armed neighbours in decades.

The potential Saudi deal also fits into Pakistan’s broader push to rebrand itself from an aid-dependent state into a defence exporter. Aamir Masood, a retired Pakistani air marshal and defence analyst, told Reuters that Pakistan is in talks or has finalised defence deals with six countries, including agreements involving JF-17 jets, weapons and electronic systems. Last month, Pakistan announced an arms deal worth more than $4 billion with Libya’s Libyan National Army, and has also held discussions with Bangladesh on possible JF-17 sales.

Pakistan’s defence minister recently suggested that sustained growth in arms exports could transform the country’s economic outlook, even claiming that continued success might reduce reliance on IMF support. Pakistan is currently in a $7 billion IMF programme, its 24th, after narrowly avoiding default in 2023 with the help of a short-term bailout and financial assistance from Gulf allies, including Saudi Arabia.

Saudi Arabia has long played a stabilising role for Pakistan during periods of economic stress. In 2018, Saudi Arabia announced a $6 billion support package, including a $3 billion deposit at Pakistan’s central bank and $3 billion worth of oil supplies on deferred payment. Those deposits have been rolled over several times, including a $1.2 billion deferment last year, helping Pakistan shore up its foreign reserves, Reuters reported.

News world Unable To Repay $2 Billion, Pakistan Offers Fighter Jet Deal To Saudi Arabia: Report

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