Islamabad, April 4, 2026 – The Europe Today: Pakistan has decided to return $3.5 billion in debt to the United Arab Emirates before the end of the month, a senior official confirmed, citing “national dignity” as a key factor behind the move.
According to the official, Abu Dhabi had requested the immediate repayment of the funds, which were originally provided in 2019 to support Pakistan’s balance of payments. “The amount will be returned as soon as possible… national dignity could not be compromised for financial considerations,” the official stated.
The deposits, extended through the Abu Dhabi Fund for Development, had been rolled over multiple times in recent years. However, extensions had recently shortened to as little as one month, indicating growing unease from the Emirati side over continuing the arrangement.
The decision comes at a sensitive time for Pakistan’s external financing position. Under its programme with the International Monetary Fund, the country is required to secure approximately $12.5 billion in rollovers from key partners, including China, Saudi Arabia, and the UAE, to maintain adequate foreign exchange reserves.
Pakistan’s central bank reserves currently stand at around $16.3 billion. Analysts warn that repaying $3 billion to $3.5 billion could reduce reserves by nearly 18 percent, weakening the country’s external buffer and import cover.
Officials acknowledged that the repayment would have implications for reserve levels but maintained that the decision was taken in light of evolving bilateral considerations and the UAE’s demand for settlement.
Economic experts cautioned that the move could increase pressure on the Pakistani rupee and complicate the country’s position under the IMF programme if not offset by fresh inflows. No immediate replacement financing arrangements have been announced.
Meanwhile, the Finance Ministry stated that it is closely monitoring and managing external financial flows to ensure stability in foreign exchange reserves. In a post on X, the ministry reaffirmed the government’s commitment to meeting all external obligations and dismissed speculation surrounding Pakistan’s external financing situation.
