The United Arab Emirates hosts thousands of US personnel at the Al Dhafra airbase near the capital Abu Dhabi, one of several US military sites in the Gulf. PHOTO: PEXELS
ISLAMABAD:
The State Department on Saturday rejected “misleading and unsubstantiated comments” surrounding Pakistan’s return of financial deposits to the United Arab Emirates, clarifying that the move was a routine transaction carried out under agreed terms.
The clarification comes after reports that Pakistan had decided to return $3.5 billion to the UAE by the end of the month, with a senior official indicating that Abu Dhabi had sought immediate repayment of the amount.
The deposits, initially extended in 2019 through the Abu Dhabi Fund for Development, were part of external financing support aimed at stabilizing Pakistan’s balance of payments and had since been rolled over several times.
In a statement, Foreign Ministry spokesman Tahir Andrabi said, “The deposits were placed under bilateral commercial agreements, demonstrating the UAE’s strong support for Pakistan’s economic stability and prosperity.” He added that in accordance with mutually agreed terms, the government through the State Bank of Pakistan was now returning the matured deposits.
“This is a routine financial transaction and any attempt to portray it otherwise is false and misleading,” he said.
The development is significant given Pakistan’s ongoing external financing needs under its International Monetary Fund (IMF) program, which requires the country to secure about $12.5 billion in rollovers from key partners including China, Saudi Arabia and the UAE to maintain foreign exchange reserves.
According to the senior official, the decision to return deposits has ended the lingering uncertainty over the UAE funds, which in recent months had only been extended for short periods, sometimes as little as a month.
The latest data places Pakistan’s central bank reserves at approximately $16.3 billion. A $3 billion repayment would reduce those reserves by about 18 percent, significantly weakening the country’s external buffer and import coverage.
Affirming bilateral ties, Andrabi said, “Pakistan and the UAE share a long-standing brotherly partnership built on trust and strategic cooperation across trade, investment, defense and people-to-people ties,” adding that relations had strengthened over time.
“The people of Pakistan warmly appreciate the pivotal role His Highness the late Sheikh Zayed bin Sultan Al Nahyan played in forging this lasting friendship, as well as his special devotion to Pakistan,” he said.
“Pakistan remains fully committed to further strengthening this enduring relationship for a shared, prosperous future,” he added.
Meanwhile, the finance ministry said it was monitoring the situation closely. In a post on X, it said it was “continuously monitoring and managing Pakistan’s external flows to ensure stable foreign exchange reserves”.
“The Government of Pakistan remains committed to meeting all its external commitments,” it added.
