Pakistan repays $3.45 billion loan to UAE using part of Saudi-backed inflows

Pakistan has completed the repayment of a USD 3.45 billion loan to the United Arab Emirates, completing obligations to the Abu Dhabi Fund for Development (ADFD), the State Bank of Pakistan announced on Friday.

"State Bank of Pakistan repaid deposit of US$ 1 billion to Abu Dhabi Fund for Development (ADFD) UAE on 23April2026. Deposits of $2.45 billion were repaid last week. This completes the repayment of total deposits of $3.45 billion to UAE," the Pakistani central bank said in a post on X.

Pakistan used recent inflows, including a USD 2 billion deposit secured from its staunch ally Saudi Arabia – part of a broader USD 3 billion package – to meet the repayment schedule. The UAE deposits, originally extended as balance-of-payments support and subject to rollovers, matured per bilateral terms.

The repayment eases one set of liabilities amid Pakistan's broader external debt management under its Monetary Fund (IMF) program, with foreign exchange reserves previously around USD 16 billion providing a buffer for such outflows.

Earlier this month, it was reported that Islamabad had decided to clear its entire fiscal obligation towards the UAE, worth USD 3.5 billion, by the end of April after the Gulf state asked for the immediate return of the funds. The development was later confirmed by a senior Pakistani cabinet minister.

According to the report, the UAE sought immediate repayment of the loans it had granted to Pakistan in the wake of the hostile situation it has faced since the outbreak of the current hostilities between Iran and the joint front of Israel and the United States.

The loan secured from the UAE had been rolled over since 2018, including a USD 3 billion facility at around 6 per cent annual interest, but was shifted from annual to monthly extensions earlier this year before Islamabad decided to repay it in full, according to an unnamed Pakistani government official cited by news agency Reuters earlier this month.

Notably, the USD 3.5 billion figure cited in media reports earlier this month purportedly included a USD 450 million that had remained overdue for years. Since the State Bank of Pakistan only announced a successful repayment of USD 3.45 billion, it might be possible that the long-overdue USD 450 million were not part of the recent settlement.

- Ends

(With inputs from agencies)

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