KARACHI: The State Bank of Pakistan (SBP) confirmed that the government has repaid $2 billion to the United Arab Emirates (UAE), as part of its external financing obligations. The payment comes amid broader efforts by Islamabad to manage its foreign exchange reserves and maintain macroeconomic stability.
In this regard, a senior Pakistani official disclosed that Abu Dhabi had requested the immediate repayment of $3.5 billion, which had been provided in 2019 to support Pakistan’s balance of payments.
The outflow of $3.5 billion is being viewed as a significant pressure on the country’s foreign exchange reserves. However, this challenge has been partially offset by recent financial support from Saudi Arabia.
On Thursday, Riyadh pledged an additional $3 billion in deposits and extended its existing $5 billion facility for another three years. Subsequently, the SBP confirmed the receipt of $2 billion from Saudi Arabia a day later.
In this sense, Pakistan’s foreign exchange reserves stood at $20.52 billion as of April 10. Finance Minister Muhammad Aurangzeb has stated that the government is exploring multiple financing avenues to maintain reserve levels and ensure timely debt repayments.
Meanwhile, Aurangzeb said Pakistan is considering issuing Eurobonds, Islamic sukuk, and dollar-settled rupee-linked bonds. He added that the government is also evaluating commercial borrowing options to replace the UAE loan and strengthen external accounts.
The finance minister focused on that Pakistan’s reserves currently cover approximately 2.8 months of imports, a level he described as crucial for sustaining macroeconomic stability.
He also noted that while the government has not yet sought changes to its $7 billion IMF programme despite global economic uncertainties, such an option remains available if needed.
