ISLAMABAD: Pakistan’s economic diplomacy has entered a critical phase as the government confirmed ongoing engagement with the United Arab Emirates over the rollover of a $2 billion loan facility a move seen as vital ahead of the country’s next review with the International Monetary Fund.
“We remain in contact regarding the rollover, and there is no issue at this stage,” the minister stated in a measured tone.
He further focused on that Pakistan’s external financing gap had been fully bridged and that there was no ambiguity regarding immediate foreign funding needs. These requirements had already been discussed at the outset of negotiations under the IMF’s $7 billion program and would continue to be reviewed in upcoming talks.
In this regard, friendly countries including the UAE, Saudi Arabia and China have committed to maintaining deposits totaling $12.5 billion with the State Bank of Pakistan through September, providing a financial cushion during the program period.
However, sources familiar with the matter suggest that the UAE recently extended the $2 billion facility for only one month, with no formal announcement yet regarding a longer-term rollover.
In this sense, State Bank officials had in December requested a two-year rollover of $2.5 billion at a reduced interest rate of 3 percent, down from 6.5 percent.
Meanwhile, negotiations between Pakistan and the IMF continue under the Extended Fund Facility and the Resilience and Sustainability Facility.
A successful review could unlock two tranches worth $1.2 billion, offering much-needed support to the country’s reserves.
