The State Bank of Pakistan (SBP) confirmed on Friday that it has fully repaid $3.45 billion in deposits to the United Arab Emirates, completing the settlement with a final $1 billion payment made on April 23.
The central bank announced the milestone on social media platform X, stating that the latest tranche followed last week’s repayment of $2.45 billion. “This completes the repayment of total deposits of $3.45 billion to UAE,” the SBP said.
Interest and Financing Pressure
The repayments include a 6% interest component, adding to Pakistan’s external financing burden. The development comes as the country navigates a widening financing gap and seeks to maintain foreign exchange reserves at around 2.8 months of import cover.
Earlier this month, Pakistan also repaid $1.43 billion in external debt, including a $1.3 billion Eurobond.
Saudi Support and New Borrowing Plans
In a parallel move, Saudi Arabia has extended the maturity of a $3 billion deposit placed with the SBP. The central bank also confirmed receiving an additional $2 billion from the kingdom earlier in April.
Finance Minister Muhammad Aurangzeb stated that Pakistan is exploring multiple options to replace the UAE facility and bolster reserves. “All options are on the table,” he said, including Eurobonds, Islamic sukuk, dollar-settled rupee-linked bonds, and commercial loans.
Speaking on the sidelines of the IMF and World Bank spring meetings, Aurangzeb emphasized that maintaining at least 2.8 months of import cover would be “an important aspect of our overall macro stability as we go forward.”
IMF Program and Regional Shocks
Pakistan has not yet requested changes to its $7 billion IMF lending program despite economic shocks from the ongoing Middle East war. However, Aurangzeb noted that adjustments remain a possible option depending on developments in the coming weeks.
The IMF board is expected to approve the next lending tranche next month, unlocking just under $1.3 billion through the Extended Fund Facility and the Resilience and Sustainability Facility.
Aurangzeb also highlighted the need for a strategic petroleum reserve and a faster transition to renewable energy in response to the volatility caused by the Middle East conflict.
