Pakistan clears $3.45 billion UAE debt as Saudi inflows support reserves

Pakistan has completed the repayment of $3.45 billion to the United Arab Emirates (UAE) as part of its external debt obligations, the State Bank of Pakistan said on Friday, marking a key step in the country’s efforts to stabilise its fragile economy.

According to the central bank, $1 billion was repaid on April 23 to the Abu Dhabi Fund for Development, while the remaining $2.45 billion had been cleared earlier in the week. The deposits were part of a series of financial arrangements extended by the UAE over the years to support Pakistan’s balance of payments.

The financial assistance included $2 billion initially provided in 2018 and rolled over annually, an additional $1 billion extended in 2023, and a smaller $450 million facility dating back to 1996-97. The repayment deadline for the total amount fell at the end of April under bilateral agreements.

The development comes shortly after Pakistan secured $3 billion in financial support from Saudi Arabia, including a $1 billion tranche received this week and $2 billion earlier in April. Finance Minister Muhammad Aurangzeb has also confirmed further Saudi commitments, including the rollover of an existing $5 billion deposit.

Pakistan is currently working under a $7 billion International Monetary Fund programme to rebuild foreign exchange reserves and restore macroeconomic stability after a prolonged balance-of-payments crisis. Authorities aim to raise reserves to around $18 billion by the end of the current fiscal year in June.

The country has increasingly relied on financial backing from key allies, including Saudi Arabia and the UAE, to meet its external financing needs and avoid default pressures in recent years.