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Pakistan and Saudi Arabia are in talks to convert around $2 billion of Saudi loans into a deal for Chinese JF-17 Thunder fighter jets, two Pakistani sources familiar with the matter told Reuters, signalling a deepening of military cooperation as Islamabad grapples with severe financial stress.
The discussions come months after the two countries signed a mutual defence pact, and reflect efforts by both allies to operationalise closer security ties at a time when Pakistan is under acute economic pressure and Saudi Arabia is recalibrating its defence partnerships amid uncertainty over long-term U.S. security commitments in the Middle East, Reuters reported.
One of the sources said the talks centre on the supply of JF-17 Thunder light combat aircraft, jointly developed by Pakistan and China and manufactured in Pakistan. A second source said the JF-17 was the primary option among other systems under discussion.
The first source said the overall deal could be valued at $4 billion, with the loan conversion covering half that amount and an additional $2 billion earmarked for equipment purchases beyond the debt swap. Both sources, described as close to Pakistan’s military, spoke on condition of anonymity as they were not authorised to comment publicly.
Pakistan’s military, as well as its finance and defence ministries, did not immediately respond to requests for comment. Saudi Arabia’s government media office also did not respond.
Pakistan’s Air Chief Marshal Zaheer Ahmed Baber Sidhu was in Saudi Arabia this week for talks on “bilateral defence cooperation, the regional security environment and future avenues of collaboration” with his Saudi counterpart, Lieutenant General Turki bin Bander bin Abdulaziz, Pakistan’s military said on Thursday.
Combat-tested platform
Air Marshal Aamir Masood (retired) said Pakistan was in talks with, or had finalised, defence export deals with six countries, including Saudi Arabia, covering JF-17 aircraft, electronic systems, and weapons packages. However, he declined to comment on specific negotiations.
“The JF-17’s marketability has increased because it is combat-tested and cost-effective,” Masood told Reuters. Pakistan has said the aircraft was deployed during its conflict with India in May last year, the most intense fighting between the nuclear-armed neighbours in decades.
The mutual defence pact, signed in September, commits both countries to treat any aggression against either as an attack on both, significantly upgrading a decades-old security relationship.
Pakistan has long provided military training and advisory support to the kingdom, while Saudi Arabia has repeatedly extended financial assistance to Islamabad during periods of economic distress.
In 2018, Riyadh announced a $6 billion support package, including a $3 billion deposit at Pakistan’s central bank and $3 billion in oil supplies on deferred payment terms. Saudi Arabia has since rolled over deposits several times, including a $1.2 billion deferment last year, helping shore up Pakistan’s foreign exchange reserves.
Arms export push
Pakistan has recently stepped up defence diplomacy as it seeks to expand arms exports and monetise its domestic defence industry.
Last month, Islamabad concluded a weapons deal worth more than $4 billion with Libya’s eastern-based Libyan National Army, officials said, one of Pakistan’s largest-ever arms sales, including JF-17 fighter jets and training aircraft.
Pakistan has also held talks with Bangladesh on a possible JF-17 sale, broadening its export ambitions beyond South Asia and the Middle East.
On Tuesday, Defence Minister Khawaja Asif said the growth of Pakistan’s defence industry could transform the country’s economic outlook.
“Our aircraft have been tested, and we are receiving so many orders that Pakistan may not need the International Monetary Fund in six months,” Asif told broadcaster Geo News.
Pakistan is currently under a $7 billion IMF programme, its 24th, following a short-term $3 billion deal in 2023 that helped avert a sovereign default. The IMF package was secured after Saudi Arabia and other Gulf allies provided financial support and deposit rollovers.
Team BharatShakti
