UAE grants Pakistan one-month rollover on $2 billion loan

The United Arab Emirates has granted Pakistan a one-month extension on the rollover of a $2 billion loan, offering short-term relief as the country works to meet conditions under its International Monetary Fund program, officials said.

A senior official at Pakistan’s Ministry of Finance said the $2 billion deposit held by the UAE had matured last month and was rolled over for an additional month, while another $1 billion deposit is due to mature in July.

“Pakistan has formally requested the UAE to roll over the full $3 billion in deposits for a period of one year,” the official told on condition of anonymity because the negotiations are ongoing. It has also requested that the interest rate on the loans be halved from the current 6.5% per annum.

For the first time, the rollover has been made for a month as negotiations are underway. The first loan of $2 billion and second one of $1 billion were borrowed in 2018 and 2023, respectively, for a year, officials said.

According to finance ministry sources, Islamabad has made a renewed request to Abu Dhabi to roll over all three tranches of the $3 billion loan, which are parked with the State Bank of Pakistan. The deposits are used to support Pakistan’s balance of payments.

Key IMF requirement

The rollover is a key requirement under Pakistan’s IMF program. Officials said Pakistan is required to secure rollovers of approximately $12 billion in external loans during the current fiscal year, including the $3 billion from the UAE.

“The rollover of the UAE deposits is one of the explicit conditions linked to the continuation of the IMF loan program,” another finance ministry official said. “These funds are critical for maintaining foreign exchange reserves and financial stability.”

The UAE currently holds $3 billion in deposits with Pakistan’s central bank. Finance officials said discussions with Emirati authorities remain constructive and expressed confidence that the rollover for a full year would be finalized.

An independent economic analyst said the short extension underscores Pakistan’s continued dependence on bilateral partners to manage its external financing needs.

“The one-month rollover buys time, but it also highlights how tight Pakistan’s external position remains,” an analyst said. "Securing a full one-year rollover will be essential for IMF confidence and for avoiding pressure on the rupee.”

Pakistan has struggled with high external debt obligations, weak exports, and low foreign exchange reserves, forcing it to rely on rollovers from friendly countries alongside IMF support.