Pakistan to Repay UAE’s $3.5 Billion Loan in Three Tranches This April
Pakistan will repay the entire $3.5 billion it owes the UAE by end-April. The UAE asked for its money back. A senior cabinet minister confirmed it to reporters. PTI reported the story.
Officials say the US-Israel-Iran conflict pushed the UAE’s hand. Islamabad had been seeking rollovers for months two years at around 3 per cent. In January, it got one month at 6.5 per cent on two $1 billion loans instead.
The repayment is split into three tranches: $450 million on April 11, $2 billion on April 17, $1 billion on April 23. The funds will likely come from the State Bank’s $16.4 billion foreign exchange reserves.
One of those tranches has a long tail. The $450 million goes back to a one-year loan from 1996-97. Pakistan is clearing it 28 years later.
Also Read:Iran Rejects Pakistan Talks, Calls US Demands ‘Unacceptable’: Report
Talks are running alongside on converting some of the debt into investment, The Express Tribune reported. Nothing is confirmed yet.
April is Pakistan’s heaviest repayment month in recent memory. Total outflows reach $4.8 billion, including a $1.3 billion Eurobond that matured April 8. The cabinet minister said reserves are at “comfortable” levels — and pointed out the country has managed before with reserves covering just one week of imports.
Islamabad spent months trying to avoid this. In December, SBP Governor Jameel Ahmad formally requested a two-year rollover on $2.5 billion in UAE debt at a reduced rate. PM Shehbaz Sharif raised it with the UAE President and told reporters a rollover had been agreed. It hadn’t.
The UAE’s terms have hardened over time. A $2 billion loan from 2018 came in at 3 per cent and was rolled over repeatedly. The rate is now 6.5 per cent. Pakistan wants it back near 3 per cent, citing improved credit ratings and falling global rates. That conversation has no resolution.
Under the $7 billion IMF programme, the UAE, Saudi Arabia, and China committed to keeping $12.5 billion combined on deposit with the State Bank until September 2027. That arrangement remains in place.
Exports fell 8 per cent in the first nine months of the fiscal year. The government wants to double outbound shipments from $32 billion within three years as its path out of the IMF programme. The numbers are moving in the wrong direction. A planned $250 million Panda Bond in January also collapsed. Officials said the process was mismanaged.
[Inputs From News Agencies]