Pakistan to Repay $2 Billion Loan to UAE Amid Rising Financial Pressure
Islamabad: Pakistan is set to repay a $2 billion loan to the United Arab Emirates (UAE) by the end of this month, following Abu Dhabi’s request for early repayment. The funds were previously held as a deposit with the State Bank of Pakistan (SBP) to support the country’s balance of payments.
UAE Demands Early Repayment
According to media reports, the UAE had extended this financial support to help stabilize Pakistan’s economy. Historically, such deposits were rolled over annually. However, recent developments in West Asia, particularly tensions linked to the US-Israel conflict involving Iran, have prompted the UAE to seek immediate repayment.
Sources indicate that the deposit, maintained with the SBP, is now scheduled to be returned to Abu Dhabi before the end of April.
Loan Details and Interest Rate
- The loan amount: $2 billion
- Interest rate: დაახლოებით 6% annually
- Previous rollover pattern: Yearly extensions
- Latest extension: Short-term rollovers until April 17, 2026
Unlike previous years, the UAE opted for shorter extensions—first one month, then two—before deciding not to continue the rollover.
Pakistan’s External Financing Challenges
For the current fiscal year, Pakistan requires approximately $12 billion in external financing, including:
- $5 billion from Saudi Arabia
- $4 billion from China
- $3 billion from the UAE
Despite having over $21 billion in foreign exchange reserves, Pakistan’s repayment obligations could increase its dependence on additional external funding in the coming months.
Economic Outlook
While Pakistan has the capacity to repay the UAE loan, analysts suggest that the move may tighten liquidity and increase short-term financial pressure. The country may need to secure fresh loans or financial assistance to maintain economic stability and meet upcoming obligations.
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