Pakistan has agreed to fully repay approximately $3.5 billion in deposits and loans to the United Arab Emirates by the end of April. The UAE sought the immediate return of the money, citing regional tensions related to conflicts in West Asia involving the US, Israel, and Iran. This decision marks a shift from the previous practice of repeated rollovers that Pakistan had relied on.
The Ministry of Foreign Affairs in Pakistan has rejected claims of misleading commentary on the repayment, emphasizing that it is a routine financial transaction under mutually agreed terms. The repayment, scheduled in three tranches, includes $450 million on April 11, $2 billion on April 17, and $1 billion on April 23. Notably, a portion of this debt includes a $450 million loan from 1996-97.
Pakistan is expected to utilize its current foreign exchange reserves of around $16.4 billion, held by the State Bank of Pakistan, to fulfill the repayment. Discussions are also underway to potentially convert a part of the amount into an investment rather than a complete cash repayment. This development underscores the challenges Pakistan faces in managing external debt and attracting new investment inflows while under IMF scrutiny.
