- Repayments include 6% interest on UAE deposits.
- Saudi Arabia extends 3 billion USD support for deposits.
- External financing gap likely to widen after repayments.
The State Bank of Pakistan (SBP) said on Friday it had repaid $1 billion to the Abu Dhabi Fund for Development (ADFD), completing the return of $3.45 billion in UAE deposits after liquidating $2.45 billion last week.
In a post on X, the central bank said the latest payment was made on April 23, marking the full repayment of deposits placed by the UAE.
“This completes the repayment of total deposits of $3.45 billion to the UAE,” the SBP said.
Earlier, on April 18, the central bank had confirmed that the government had repaid $2 billion in debt to the UAE. An SBP spokesperson had said that the amount was kept in the central bank as a safe.
The repayments come as Pakistan deals with pressure on its external financing position, with the financing gap likely to widen following the return of UAE deposits along with a 6% interest payment.
Pakistan has also recently repaid $1.43 billion in external debt, including a $1.3 billion Eurobond.
The development follows an agreement with Saudi Arabia to extend the term of a $3 billion deposit placed with the SBP. The central bank had also said earlier this month that it was receiving $2 billion from the kingdom with a maturity date of April 15, 2026.
Finance Minister Muhammad Aurangzeb had earlier said that Pakistan was considering Eurobonds, loans from other countries and commercial debt to replace the UAE loan facility and manage the foreign exchange reserves.
“All options are on the table,” Aurangzeb said when asked if the government was in talks with Saudi Arabia for a loan to replace the UAE facility.
On the sidelines of the IMF and World Bank spring meetings, he said Pakistan could meet all debt repayments and reserves remained at about 2.8 months of import coverage.
Maintaining at least that level, the finance czar said, would be “an important aspect of our overall macro stability going forward”.
“We are looking at Eurobond, we are looking at Islamic sukuk, we are looking at dollar-settled rupee-linked bonds,” Aurangzeb said, adding that Pakistan expected to issue Eurobonds this year and was also exploring commercial loans.
He also said that the shock of the ongoing Middle East war meant that Pakistan must consider a strategic oil reserve and a faster transition to renewable energy.
Aurangzeb said Pakistan had not yet requested any additions or changes to its $7 billion IMF loan program because of the economic shocks from the war in the Middle East, but added that it remained a possible option depending on developments in the coming weeks.
The IMF board is likely to approve the latest lending tranche next month, which will release just under $1.3 billion through the Extended Fund Facility and the Resilience and Sustainability Facility.
