New Delhi/Islamabad, April 4 (IANS) Facing mounting pressure, Pakistan has agreed to fully repay approximately “USD 3.5 billion” in deposits and loans to the United Arab Emirates (UAE) by the end of April, after the Gulf nation sought the immediate return of the money.
The development comes amid reports that the UAE asked for the swift repayment of the funds, reportedly due to regional tensions linked to the ongoing conflict in West Asia involving the US, Israel, and Iran.
Multiple media reports and senior Pakistani officials have confirmed that Abu Dhabi recently demanded the money back, ending the practice of repeated rollovers that Pakistan had relied on for years.
On Saturday, Pakistan’s Ministry of Foreign Affairs issued a statement categorically rejecting what it called “misleading and unfounded commentary” on the matter.
The ministry described the repayment as a “routine financial transaction” under mutually agreed bilateral commercial terms and stressed that the deposits had demonstrated the UAE’s support for Pakistan’s economic stability.
However, the timing and nature of the UAE’s request have raised questions about the strain on Pakistan’s finances.
A senior cabinet minister confirmed the decision to clear the entire debt, with repayments scheduled in three tranches: $450 million on April 11, $2 billion on April 17, and $1 billion on April 23. One portion includes a decade-old $450 million loan from 1996-97.
Officials indicated that funds would likely be drawn from the State Bank of Pakistan’s current foreign exchange reserves of around $16.4 billion.
Parallel discussions are reportedly underway to convert part of the amount into an investment rather than a full cash repayment. The episode has been viewed as somewhat embarrassing for Pakistan, which has long depended on friendly deposits from the UAE, Saudi Arabia, and China to bolster its reserves under the IMF programme.
Earlier this year, Prime Minister Shehbaz Sharif had publicly admitted feeling “embarrassed” while seeking such external financial support, acknowledging that it often limits the country’s policy manoeuvrability. Despite the outflows, Pakistani officials have maintained that reserves remain at “comfortable” levels.
The country has committed to keeping allied deposits intact until the current $7 billion IMF programme concludes in September 2027. The swift repayment — shifting from long-term or short-term rollovers to full settlement within weeks — highlights Pakistan’s ongoing challenges in managing external debt and attracting fresh investment inflows while under IMF scrutiny.
The move comes as Pakistan’s exports have declined and foreign investment remains weak, adding to the economic pressures on Islamabad.
–IANS
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