Pakistan has made a significant repayment of $2 billion to the United Arab Emirates on Saturday, reducing its debt to the Gulf nation. This payment brings the total amount repaid to Abu Dhabi this week to $2.5 billion. The repayment was made by acquiring a new debt from Saudi Arabia, as confirmed by government officials.
The $2 billion loan from the UAE was initially taken in 2018 during the tenure of former Prime Minister Imran Khan's government to bolster foreign exchange reserves. This loan, along with another $450 million UAE debt that was paid earlier this week, has been settled after several years.
The repayment process will not have a negative impact on Pakistan's foreign exchange reserves, which currently stand at around $15 billion. The remaining $1 billion UAE debt is scheduled to be repaid next Thursday, with Pakistan planning to utilize a $1 billion loan from Saudi Arabia for this purpose. Saudi Arabia has also extended a $5 billion cash deposit-based debt for an additional two years.
In addition to the debt repayments, Pakistan recently raised a $500 million debt at a 7% interest rate against Eurobonds purchased by Standard Chartered Bank. The country is also set to extend a $1.2 billion annual oil facility from Saudi Arabia on deferred payments, with a 6% interest rate.
Pakistan's financial transactions, including foreign debt repayments and acquisitions valued over $3 million, are reported to the International Monetary Fund. These transactions involve various sources such as the Asian Development Bank, Islamic Development Bank, World Bank, bilateral oil facilities, China, Saudi Arabia, UAE, external bond placements, and other commercial borrowings.
