Pakistan plans to repay $3.5 billion loan to UAE in April amid reserve strain
India Today
Pakistan has scheduled USD 3.5 billion loan repayments to the UAE in April, even as reserves rely on allied deposits and investment inflows remain weak amid IMF pressure.
Pakistan has opted to clear its entire USD 3.5 billion debt to the United Arab Emirates (UAE) within April, a senior cabinet minister said during a media briefing on Friday, putting to rest uncertainty after Abu Dhabi had recently shifted to short-term rollovers.
The decision, taken by the political leadership, was conveyed to a group of reporters, with the minister confirming that the full amount would be repaid. However, parallel discussions are also underway on the possibility of converting part of the outstanding sum into investment, The Express Tribune quoted senior officials as saying.
The repayment schedule has been finalised: USD 450 million will be returned on April 11, followed by USD 2 billion on April 17 and another USD 1 billion on April 23. Officials said arrangements are being made, with a likelihood that the funds could be drawn from the central bank's USD 16.4 billion foreign exchange reserves.
Of the total amount, USD 450 million traces back to a one-year loan taken in 1996-97, which is now set to be cleared after nearly three decades.
The move came amid shifting dynamics around the debt. Earlier, the UAE had shown reluctance to extend long-term rollovers, opting instead for short-term extensions. In January, two USD 1 billion loans maturing on January 16 and 22 were rolled over for just one month at an interest rate of 6.5 per cent, despite Pakistan seeking a two-year extension at roughly 3 per cent interest rate.
Officials believe that the ongoing US-Israel-Iran conflict accelerated the decision-making process, culminating in the current repayment plan.
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