ISLAMABAD: Pakistan’s finance ministry said on Friday the country remains “committed to fulfilling all its external obligations,” following reports that Islamabad had decided to return this month a $3.5 billion debt it owed to the United Arab Emirates (UAE).
Loan rollovers from China, Saudi Arabia and the UAE are crucial for the South Asian country, which has to maintain around $12.5 billion in foreign reserves as part of its $7 billion International Monetary Fund (IMF) program that expires in September next year.
The UAE provided $2 billion to Pakistan in 2018 and Islamabad has sought rollovers annually since then. In 2023, the Gulf nation extended another loan of $1 billion to help Islamabad meet IMF’s external financing requirements, while the UAE gave another $450 million loan in 1996-97, Pakistan’s Express Tribune newspaper reported.
While a cabinet minister said that the money was being returned, the newspaper cited some senior government officials and reported that discussions were taking place to convert a portion of the amount into investment.
“Ministry of Finance is continuously monitoring and managing Pakistan’s external flows in order to ensure stable foreign exchange reserves,” the ministry said late Friday, in response to media reports regarding Pakistan’s external flows.
“The Government of Pakistan remains committed to fulfilling all its external obligations.”
Early last month, State Bank of Pakistan (SBP) Governor Jameel Ahmad had said the UAE was not demanding repayment of the $2 billion loan, but had instead shifted it to a monthly rollover, according to the Express Tribune report.
It has now emerged that the UAE asked Pakistan to pay back its money, which had originally been given only for one year. The US-Israel war on Iran appeared to have expedited the entire process, which has now culminated in preparations to repay the debt.
Pakistani authorities said that the “government would return $450 million on April 11, $2b on April 17th and another $1b on April 23rd,” the report read.
