Pakistan will repay $3.5 billion debt to the United Arab Emirates this month, officials confirmed Friday. The move aims to reduce uncertainty and strengthen financial credibility amid economic pressure. It directly impacts reserves, fiscal stability, and ties with key international partners.
The government will repay the amount in three installments in April, according to senior officials. These include $450 million, $2 billion, and $1 billion on scheduled dates. This step ends speculation about further loan rollovers by the UAE. Earlier, the UAE extended loans only briefly instead of granting longer extensions. As a result, authorities moved quickly to finalize repayment plans.
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Meanwhile, officials said talks continue to convert part of the debt into investment. This option could ease pressure on reserves and support long-term cooperation. In addition, geopolitical tensions, including the US-Israel-Iran conflict, reportedly sped up repayment expectations. These developments pushed both sides toward a quicker resolution. Therefore, repayment became the preferred policy choice.
Pakistan’s financial commitments remain tied to its $7 billion International Monetary Fund program. Under this program, friendly countries pledged to maintain $12.5 billion in deposits. However, Pakistan still faces falling exports and weak foreign investment. Officials said reserves remain stable but may be used for repayments. Consequently, managing liquidity remains a major challenge.
Read more: Pakistan decides to repay UAE’s $2bn loan: sources
In total, Pakistan will repay about $4.8 billion in April, including a $1.3 billion Eurobond. The government continues efforts to boost exports and reduce reliance on loans. Prime Minister Shehbaz Sharif has highlighted the difficulty of external borrowing. Efforts to raise funds through international bonds also faced setbacks. These issues underline ongoing structural challenges in the economy.