ISLAMABAD: The United Arab Emirates (UAE) has agreed to roll over $2 billion in loans to Pakistan for one month at an interest rate of 6.5 per cent, providing short-term relief to the country’s strained foreign exchange reserves as negotiations continue on a longer-term arrangement.
According to officials, the amount comprises two separate loans of $1 billion each, which had matured on January 16 and January 22. Both facilities have now been extended for a month to allow Islamabad and Abu Dhabi additional time to finalize the duration and pricing of a more permanent rollover.
Pakistan is seeking a two-year rollover with an interest rate closer to 3 per cent, citing pressure on reserves and ongoing fiscal challenges. Officials familiar with the matter said Islamabad is preparing to submit another formal request to the UAE in the coming days.
Media reports quoting sources warned that if the loans are repaid instead of rolled over, Pakistan would face an immediate financing gap, which would have to be bridged through alternative borrowing or reserve drawdowns.
The temporary extension comes under Pakistan’s ongoing $7 billion programme with the International Monetary Fund (IMF). Under the programme’s framework, key bilateral partners — the UAE, Saudi Arabia, and China — have committed to maintaining a combined $12.5 billion in deposits with the State Bank of Pakistan until the IMF programme concludes in September next year.
Economists say the one-month rollover offers breathing space but underscores the urgency for Pakistan to secure longer-term debt relief and external financing support to stabilize its economy and meet IMF conditions.
Further negotiations with the UAE are expected in the coming weeks as Pakistan works to shore up reserves and manage upcoming external payment obligations.
