FO rejects 'misleading' claims on UAE's debt repayment, calls it routine financial transaction

🔊PR No.9️⃣1️⃣/2️⃣0️⃣2️⃣6️⃣

Pakistan Rejects Misleading Commentary on UAE Financial Deposits, Reaffirms Strong Partnership with UAE pic.twitter.com/0RCfCEbmea

According to the statement issued by FO today, X said that the deposits were made under bilateral commercial agreements that reflect the UAE’s strong support for Pakistan’s economic stability and prosperity.

"In line with mutually agreed terms, the Government of Pakistan, through the SBP, is now in the process of returning the matured deposits to the UAE. This is a routine financial transaction, and any attempt to portray it otherwise is erroneous and misleading,” the FO emphasised.

Read: Pakistan to repay $3.5b UAE debt this month

The statement further highlighted the longstanding, fraternal partnership between Pakistan and the UAE, built on trust and strategic cooperation in areas such as trade, investment, defence, and people-to-people ties. It noted that this relationship has “stood the test of time and has grown stronger with each passing year.”

The people of Pakistan, the statement added, “warmly cherish the pivotal role played by the late Sheikh Zayed bin Sultan Al Nahyan, in forging this enduring friendship, as well as his special affection for Pakistan.”

Concluding the statement, the FO affirmed Pakistan’s full commitment to further strengthening this enduring partnership for a shared and prosperous future.

The Express Tribune had reported in January that the UAE rolled over two loans of $1 billion each, which matured on January 16 and 22, only for a month. Pakistan had sought a two-year rollover and an interest rate of around 3%. But the UAE rolled it over then at the old terms of 6.5% interest rate.

Under the $7 billion IMF programme, the UAE, Saudi Arabia and China had committed to maintaining their combined $12.5 billion in cash deposits with the SBP at least until the programme expires in September next year.

Also Read: No demand for repayment of $2b loan from UAE, SBP governor briefs NA panel

In December, State Bank of Pakistan Governor Jameel Ahmad had requested the UAE government to roll over the $2.5 billion in debt for two years and cut the interest rate by almost half.

Subsequently, Prime Minister Shehbaz Sharif also requested the UAE president to extend the repayment period. The prime minister said the UAE had agreed to roll over the debt, but did not provide further details.

The UAE provided $2 billion to Pakistan in 2018 for one year, but Pakistan was unable to repay the amount and has sought rollovers annually since then. Later, the UAE extended another loan of $1 billion in 2023 to help Pakistan meet external financing requirements for an IMF bailout.

Early last month, SBP Governor Jameel Ahmad said that the UAE was not demanding repayment of the $2 billion loan, but had instead shifted it to a monthly rollover". But it has now emerged that the UAE asked Pakistan to pay back its money, which had originally been given only for one year.

In December, Governor Ahmad had requested the UAE government to roll over $2.5 billion in debt for two years and cut the interest rate by almost half. Subsequently, Prime Minister Shehbaz Sharif also requested the UAE president to extend the repayment period. The prime minister said the UAE had agreed to roll over the debt, but did not provide further details.

Read: UAE rolls over $2b Pak loan for a month

The Pakistani authorities said that the government would return $450 million on April 11, $2 billion on April 17th and another $1 billon on April 23rd. They said that they were making arrangements for paying the debt.

However, there was a possibility that the money would be paid out of the $16.4 billion foreign exchange reserves held by the central bank.

Cumulatively, Pakistan will pay back $4.8 billion debt in April, including $1.3 billion Eurobond on April 8th.