Pakistan has formally requested the United Arab Emirates (UAE) to extend the maturity of a $2 billion loan, as reported by sources within the Ministry of Finance on Tuesday.
According to the sources, Prime Minister Anwaar-ul-Haq Kakar has penned a letter to the President of the UAE to discuss the possibility of rolling over the $2 billion loan.
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The UAE had deposited a total of $3 billion in safe deposits with the State Bank of Pakistan (SBP). Out of this amount, $1 billion was slated to mature on January 17, 2024, while another $1 billion was set to mature on January 23. The interest rate on the first $1 billion deposit is 3 percent, and for the second $1 billion, it stands at 6.5 percent.
It is noteworthy that Pakistan’s liquid foreign exchange reserves, held by the State Bank of Pakistan, have demonstrated strength in recent weeks. As of December 29, the foreign currency reserves held by the SBP were recorded at $8.221 billion. Over the last two weeks, the central bank’s reserves have increased by more than $1.3 billion.
This move by Pakistan to seek a loan rollover from the UAE reflects efforts to manage the country’s external financial obligations and ensure stability in its foreign exchange reserves. Rollover requests allow for the extension of loan maturity dates, providing a degree of flexibility in managing debt repayments.
Prime Minister Anwaar-ul-Haq Kakar’s letter to the UAE President underscores the diplomatic and financial coordination between the two nations. Such negotiations are crucial in maintaining economic stability and meeting financial obligations, particularly during periods of economic challenges or global uncertainties. The outcome of these discussions will play a significant role in shaping Pakistan’s fiscal strategy and ensuring the continued support of international partners in its economic development.
