Pakistan has repaid $2 billion to the United Arab Emirates. The State Bank of Pakistan confirmed the repayment on Saturday. The amount was held as a safe deposit with the central bank.
The SBP spokesperson said the government returned the funds along with a 6 percent interest payment. This move comes as part of mutually agreed terms between the two countries. It happened just one day after Pakistan signed a deal with Saudi Arabia to extend the maturity of its $3 billion deposit.
Repayment adds pressure on foreign reserves.
This repayment will widen Pakistan’s external financing gap. In recent weeks, the country also cleared $1.43 billion in other external debts, including a $1.3 billion Eurobond. Finance Minister Muhammad Aurangzeb noted that the government is now exploring new ways to manage reserves and fill the gap.
Aurangzeb said all options remain open. These include issuing Eurobonds, Islamic sukuk, and dollar-settled rupee-linked bonds. He added that Pakistan is also looking at commercial loans from friendly countries.
Government focuses on long-term stability.
Despite the repayments, Aurangzeb assured that foreign reserves currently stand at comfortable levels. He stressed the need to maintain at least 2.8 months of import cover for macro stability. The minister also mentioned the impact of the Middle East conflict and the importance of building a strategic petroleum reserve.
Pakistan continues to work closely with the IMF. The next tranche under the Extended Fund Facility is expected soon. This will bring in nearly $1.3 billion and help support the balance of payments.
The timely repayment to the UAE shows Pakistan’s commitment to honour its financial obligations. Officials remain confident that fresh inflows and new borrowing plans will keep the economy on a steady path.
