Pakistan Repays $2bn UAE Deposit as External Financing Pressures Mount
By Shahzad Paracha :
Pakistan has repaid $2bn in deposits to the United Arab Emirates, according to the State Bank of Pakistan, in a move that is expected to add pressure on the country’s already strained foreign exchange reserves.
A central bank spokesperson said the funds had been held as a safe deposit with the SBP and have now been returned along with interest. The repayment comes at a sensitive time for Pakistan’s external account, which is facing multiple financing challenges.
The development follows a separate agreement with Saudi Arabia to extend the maturity of a $3bn deposit placed with the SBP, providing some relief to the country’s reserve position. Saudi authorities have also recently transferred additional funds, offering short-term support amid economic uncertainty.
Despite this, analysts warn that Pakistan’s financing gap could widen as debt repayments continue. The government has also cleared over $1bn in other external obligations in recent weeks, including a major Eurobond payment.
Finance Minister Muhammad Aurangzeb has said the government is exploring multiple options to stabilise reserves, including issuing Eurobonds, raising commercial loans and tapping Islamic financing instruments.
Speaking during meetings linked to the International Monetary Fund and World Bank, he said maintaining foreign reserves at a level covering at least a few months of imports remains critical for macroeconomic stability.
He added that while Pakistan has not yet sought changes to its existing IMF programme, the option remains open depending on how external conditions evolve, particularly in light of economic fallout from ongoing tensions in the Middle East.
The IMF is expected to review Pakistan’s programme in the coming weeks, with a fresh disbursement likely to unlock additional funding if approved.
Officials say the government remains confident it can meet upcoming obligations, but acknowledge that external financing risks continue to pose a significant challenge.
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