Pakistan has arranged to repay $4.8 billion in external debt obligations by the end of June, with a significant portion directed to the United Arab Emirates, according to official sources. The move comes as the country manages a critical $1.3 billion Eurobond maturity this week.
UAE Repayment and Regional Pressures
The repayment plan includes $3.5 billion payable to the UAE through three separate financial facilities. This follows a federal government decision to return a $2 billion deposit from Abu Dhabi by the end of April. The deposit, held by the State Bank of Pakistan, had been accruing interest at approximately 6%.
Sources indicate the UAE recently requested the immediate return of funds, a shift attributed to the evolving geopolitical situation in the Middle East following the US-Israel conflict with Iran. Previously, such deposits were routinely rolled over annually.
New Financial Inflows and Rollover Strategy
To bolster its foreign exchange reserves, Islamabad has reportedly received assurances for over $5 billion in financial support from two friendly countries. This is part of a broader strategy to manage external financing needs for the current fiscal year.
Officials are seeking rollovers on approximately $12 billion in external deposits. This includes about $9 billion from key allies Saudi Arabia and China, in addition to the UAE deposits.
Government Clarifies Transaction Nature
The Foreign Office has addressed the repayment, labeling it a routine financial transaction. In a statement, it rejected what it called “misleading and unfounded” reports, emphasizing that the funds were placed under bilateral commercial agreements.
“The deposits demonstrated the UAE’s strong support for Pakistan’s economic stability and prosperity,” the statement read, clarifying that the return of matured deposits is proceeding under mutually agreed terms.
Immediate Debt Pressures
A pressing concern is the maturity of a $1.3 billion Eurobond this week, which officials confirm will be repaid. This adds to near-term external payment pressures. The financial arrangements for the UAE deposits have seen shorter extensions in recent months, reflecting tighter conditions, with the latest rollover set until April 17, 2026.
