Pakistan recently repaid $3.5 billion to the United Arab Emirates, prompting Saudi Arabia to provide immediate financial assistance. This move has raised concerns about Pakistan’s increasing dependence on Gulf financing. Saudi Arabia deposited $3 billion into Pakistan’s foreign reserves after the UAE demanded repayment due to displeasure over Islamabad’s Middle East policy.
Some analysts caution against Pakistan’s heavy reliance on Riyadh’s financial aid, which now accounts for nearly half of the State Bank of Pakistan’s total foreign reserves of $16 billion. Karachi-based economist Shahid Hasan Siddiqui warned that while the relief from Saudi Arabia is temporary, it poses long-term economic risks and limits Islamabad’s financial options.
Siddiqui emphasized the need for structural reforms to prevent a compromise in foreign policy and suggested taxing large foreign remittances to deter money laundering. He expressed concerns over Pakistan’s trade deficit, where foreign remittances are used to cover imports rather than being invested.
Pakistan’s Foreign Ministry described the repayment to the UAE as a routine financial transaction with no connection to Middle East conflicts. The Ministry stressed that there is no gap between Islamabad and Abu Dhabi, highlighting Pakistan’s decision to prioritize long-term stability over short-term gains by aligning with Riyadh.
