Pakistan fully repays $3.45B UAE debt, invokes 'national dignity'
What's the story
Pakistan has repaid its entire debt of $3.45 billion to the United Arab Emirates (UAE), just days after the latter demanded repayment. The State Bank of Pakistan announced that it paid back a deposit of $1 billion to the Abu Dhabi Fund for Development on April 23, and an additional $2.45 billion last week. "This completes the repayment of total deposits of $3.45 billion to UAE," it said in a statement.
Unexpected request
UAE's repayment demand breaks trend of rollover extensions
The UAE's sudden demand for the repayment of nearly $3 billion in loans has surprised Pakistan. The request came after Islamabad failed to negotiate a rollover of the debt with the Gulf nation, breaking a seven-year trend. A senior Pakistani official told Dawn that the decision to repay was taken before this month's end, despite its impact on foreign exchange reserves. The same official reportedly said it was a cost the country was "willing to bear to uphold national dignity."
Economic strain
Pakistan's forex crisis and IMF bailout program
Pakistan is grappling with a severe forex crisis, with reserves at around $16.4 billion as of March 27. The country is also under a $7 billion bailout program from the International Monetary Fund (IMF). Last month, the IMF reached a staff-level agreement with Islamabad to release a $1.2 billion tranche.
Aid received
Saudi Arabia extends $2 billion aid to Pakistan
Earlier this month, the State Bank of Pakistan also received $2 billion from Saudi Arabia's Ministry of Finance. This aid is part of a larger financial package aimed at bolstering Pakistan's foreign exchange reserves. According to a Reuters report, this Saudi assistance was likely intended to help fill the multi-billion-dollar gap in financing related to the UAE debt repayment.