Pakistan clears $3.45b loan to UAE after final $1b payment: SBP
Pakistan has completed the repayment of $3.45 billion in deposits to the United Arab Emirates (UAE) after returning a final tranche of $1 billion, the State Bank of Pakistan (SBP) announced on Friday.
In a post on X, the SBP announced that it repaid a $1 billion deposit to the Abu Dhabi Fund for Development (ADFD) on April 23. The central bank added that $2.45 billion had been repaid last week.
State Bank of Pakistan repaid deposit of US$ 1 billion to Abu Dhabi Fund for Development (ADFD) UAE on 23April2026. Deposits of $2.45 billion were repaid last week. This completes the repayment of total deposits of $3.45 billion to UAE.
"This completes the repayment of total deposits of $3.45 billion to the UAE," it further added.
With the latest transaction, Pakistan has now fully cleared the outstanding deposits owed to UAE-based institutions. The repayments come as Pakistan continues efforts to manage external financing obligations and strengthen macroeconomic stability.
Pakistan returned the $2 billion UAE debt on April 18 by taking a new debt from Saudi Arabia, bringing the total repayments to Abu Dhabi this week to $2.5 billion, according to the government officials.
The remaining $1 billion UAE debt was also settled by availing another $1 billion Saudi loan.
The finance ministry had not factored in these repayments till the end of last month and had assured the International Monetary Fund (IMF) that its external financing requirements were fully met on the back of rollovers by China, Saudi Arabia, and the UAE, showed the fresh details.
Former prime minister Imran Khan's government had taken the $2 billion loan in 2018 to sustain the foreign exchange reserves that were on a downward trajectory due to a delay in reaching a deal with the IMF. Another $450 million UAE loan that Islamabad paid early this week had been taken in 1996-97 for a one-year period, which Pakistan returned after 30 years.
There would not be any negative impact on the foreign exchange reserves that are hovering around $15 billion, as the debt is being repaid by contracting new debt.
Saudi Arabia has also extended the existing $5 billion cash deposit-based debt for two years, said the officials. Pakistan was earlier paying 4% interest rate on Saudi loans, and it is not clear whether the extension and the new $3 billion debt were given at the existing or the new rates.
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The UAE's decision to demand its money back had created a $3.5 billion hole. The finance ministry officials said that the government had not factored in the UAE repayment, and it last month assured the IMF that "based on existing financing commitments from bilateral and multilateral partners, the (IMF) programme is fully financed for the next 12 months".
It had further assured the IMF in March that, as committed at the outset of the Extended Fund Facility, Pakistan's bilateral partners will also continue rolling over short-term claims, including loans, swaps and deposits, for the duration of the programme.
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.
The Express Tribune had reported in January that the UAE rolled over $2 billion for one 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.