KARACHI: State Bank of Pakistan has completed the repayment of $3.45 billion in deposits to the UAE. The central bank confirmed that it paid the final $1 billion to the Abu Dhabi Fund for Development on April 23.
Earlier, Pakistan returned $2.45 billion last week. As a result, the full UAE deposit has now been cleared. The central bank shared the update in an official statement and said the repayment process has been completed successfully.
These deposits were placed with Pakistan to support its foreign exchange reserves. Now, with the repayment complete, pressure on reserves is likely to increase. The payments also include around 6% interest. Because of this, the overall financial burden has risen further.
At the same time, Pakistan is already facing external financing challenges. Experts believe the financing gap may widen after these repayments. The country has also cleared $1.43 billion in additional external debt. This includes a $1.3 billion Eurobond. Therefore, total outflows have increased in recent weeks.
However, some support has come from Saudi Arabia. The kingdom has extended the maturity of its $3 billion deposit with Pakistan. In addition, Pakistan recently received another $2 billion from Saudi Arabia. This support is helping ease short-term pressure on reserves.
Finance Minister Muhammad Aurangzeb said the government is actively exploring alternative funding options. He mentioned Eurobonds, commercial loans, and Islamic sukuk as possible sources. He added that all options remain under consideration.
He further said that Pakistan plans to return to international markets soon. The government is preparing to issue Eurobonds within the year. Along with this, officials are also reviewing dollar-based and rupee-linked bond options.
While speaking at meetings of the International Monetary Fund and the World Bank, Aurangzeb expressed confidence in managing debt obligations. He said Pakistan can meet its repayment targets without major disruption.
He also highlighted the importance of maintaining foreign reserves. Currently, reserves cover around 2.8 months of imports. He said keeping reserves at this level is essential for economic stability in the coming months.
At the same time, global developments are adding uncertainty. The ongoing Middle East conflict may impact oil prices and external balances. Due to this risk, Pakistan is considering building a strategic petroleum reserve. It is also working to accelerate the shift toward renewable energy.
Pakistan has not yet requested any changes to its $7 billion IMF programme. However, officials say this option remains open if economic conditions worsen. The government is closely monitoring the situation before making any decision.
The IMF board is expected to review Pakistan’s programme soon. Approval of the next tranche could unlock nearly $1.3 billion. This inflow would provide some relief to the country’s external account.
Overall, Pakistan has cleared a major financial obligation with the UAE. Still, the focus now remains on managing reserves, securing new funding, and maintaining economic stability in a challenging global environment.
