- The UAE loan must be repaid at the end of the month.
- Saudi minister visited Islamabad recently.
- China remains Pakistan’s largest bilateral creditor.
Pakistan is in talks with Saudi Arabia and China to secure financial support as it prepares to repay a roughly $3 billion loan to the United Arab Emirates, according to people familiar with the matter. Bloomberg reported.
the conversations, The news reported, citing Bloomberg, involving loans and investments, the people said, asking not to be identified because the conversations are private. The amount of aid being discussed is more than $3.5 billion, one of the people said.
Pakistan failed to reach an agreement with the UAE to transfer the debt for the first time in seven years. Islamabad will now repay the amount by the end of this month, putting significant pressure on its foreign exchange reserves, which stand at around $16 billion, enough to cover just three months of imports.
Pakistan’s finance ministry, foreign ministry and Saudi Arabia’s media ministry did not immediately respond to requests for information. Saudi Arabia’s Finance Minister Mohammed Al-Jadaan was in Islamabad on April 10 to hold talks with officials, just before Pakistan hosted US-Iran peace talks over the weekend. In his meeting with the Saudi minister, Pakistan’s Prime Minister Shehbaz Sharif expressed “strong commitment to expand its cooperation with the kingdom in all areas, especially in trade, investment and economic development,” according to an official readout from his office.
The two countries have steadily increased their economic and security ties in recent months, while relations between Saudi Arabia and the UAE have frayed. Saudi Arabia announced over the weekend that Pakistan had sent fighter jets to the kingdom under their mutual defense pact to bolster security in the country and the region.
Iran has targeted the kingdom and other Middle Eastern neighbors with missile strikes in retaliation for its ties to the United States.
The United Arab Emirates has not disclosed the reasons for calling in its loan to Pakistan. Pakistan’s foreign ministry has tried to play down media speculation that it was linked to a possible political fallout between the two countries, saying last week that the move was a “routine financial transaction.”
A person familiar with the matter said the UAE had requested a transition period of less than a year, which Pakistan did not accept. Pakistan also has close economic ties with China, its biggest lender, to whom it owes more than $25 billion. Islamabad is making attempts to launch the next phase of the China-Pakistan Economic Corridor under Beijing’s Belt and Road Initiative as a follow-up to the roughly $60 billion first phase launched more than a decade ago.
The International Monetary Fund (IMF) also reached an initial agreement with Pakistan last month to disburse a loan of about $1.2 billion from a $7 billion financing program. Pakistan has received about two dozen bailouts from the global lender since the 1960s.
