Pakistan moves to clear $3B UAE debt in days as fresh funding lines up

Pakistan has finalized arrangements to repay $3 billion to the United Arab Emirates within the next week, as part of broader efforts to manage external financing and strengthen foreign exchange reserves, according to official sources.

The repayment is expected to be carried out in two tranches, with about $2 billion likely to be paid on April 17 and the remaining $1 billion on April 23, finance ministry sources said.

Separately, Pakistan has already repaid a $450 million loan to the UAE that dated back roughly three decades, the sources added.

Foreign reserves to be boosted

Authorities have also prepared a strategy to increase the central bank’s foreign exchange reserves to $18 billion by June, reflecting efforts to stabilize the economy and meet external obligations.

In parallel, financial support from Saudi Arabia is expected to offset the outflow linked to the UAE repayment.

Sources said an additional $3 billion Saudi facility is likely to fill the gap, which would raise Saudi deposits with Pakistan to about $8 billion. The State Bank of Pakistan confirmed on Thursday that it has already received $2 billion.

Beyond deposits, Pakistan is also expected to secure an oil facility on deferred payments from Saudi Arabia. The current facility, valued at around $1 billion, is nearing completion. At present, Saudi Arabia is providing roughly $100 million per month in oil support, with total assistance for the current fiscal year estimated at $1 billion.

Multiple sources of funding

Meanwhile, Pakistan is anticipating the next disbursement of about $1.21 billion from the International Monetary Fund as early as next month, following a staff-level agreement between the two sides. The funds will be released after approval by the IMF’s executive board.

To diversify financing sources, Pakistan also plans to issue bonds in international capital markets this year, including potential Panda bonds in the Chinese market. The government is additionally exploring borrowing from commercial banks, according to finance ministry officials.

Currently, Pakistan holds about over $14 billion in deposits from key bilateral partners, including $7 billion from Saudi Arabia, $4 billion from China and $3 billion from the UAE, the sources said.

The measures come as Pakistan seeks to manage external liabilities, bolster reserves and maintain financial stability amid ongoing economic reforms.