Islamabad, April 4: Pakistan has attempted to mediate the ongoing conflict between Iran and the United States. However, the country is now facing a significant setback as the United Arab Emirates (UAE) has demanded the repayment of a $3.5 billion loan. Struggling economically, Pakistan relies on international aid and must return the loan by the end of this month.
The UAE had previously extended the repayment deadline multiple times. Recent media reports confirm that the UAE has insisted on full repayment by the end of April.
Currently, Pakistan’s foreign exchange reserves exceed $21 billion. While the country can repay the UAE loan with its reserves, it may require external financial assistance in the coming months.
Pakistan is dependent on international support to sustain its economy. By March 31, 2026, the country had borrowed approximately $7.29 billion from the International Monetary Fund (IMF). According to Trading Economics, Pakistan’s total foreign debt reached nearly $138 billion by the second quarter of December 2025.
The IMF reports that Pakistan is currently operating under a $7 billion extended fund facility program. At the end of March 2026, the IMF agreed to release approximately $1.2 billion as the next installment for Pakistan.
China remains Pakistan’s largest creditor, having lent around $29 billion. Additionally, Saudi Arabia has provided financial assistance and deposits totaling approximately $9.16 billion.
According to Profit by Pakistan, the country is also due to make a $1.3 billion payment on Eurobonds in April 2026.
A Pakistani official stated that Abu Dhabi has requested the immediate return of the funds. The official emphasized, “This amount will be returned as soon as possible. Financial reasons cannot compromise national dignity.”
These funds were part of the external financing support provided by the UAE in 2019 to stabilize Pakistan’s payment balance. The decision has clarified uncertainties regarding deposits collected through the Abu Dhabi Fund for Development, which had been rolled over multiple times since 2019.
Under its ongoing IMF program, Pakistan needs to secure approximately $12.5 billion in rollovers from three main partners—China, Saudi Arabia, and the UAE—to maintain reserve levels and meet external funding needs. Thus, the UAE’s deposits are a crucial part of this arrangement.
An economic analyst cited by Dawn warned that if new inflows do not materialize, pressure on the Pakistani rupee could increase, complicating the country’s situation under the IMF program.
Meanwhile, the Finance Ministry stated via a post on social media platform X that it is “continuously monitoring and managing Pakistan’s external flows to ensure stable foreign exchange reserves.”
The ministry further asserted, “The Pakistan government is committed to fulfilling all its external obligations.”
Leave a Comment