Islamabad, April 19, 2026 – The Europe Today: Pakistan on Saturday repaid $2 billion in debt to the United Arab Emirates after seven years, marking a significant step in reducing its financial dependence on the Gulf nation that had supported Islamabad during the economic crises of 2018 and 2023.
According to government officials, the repayment was made by securing fresh financing from Saudi Arabia, bringing Pakistan’s total repayments to Abu Dhabi this week to $2.5 billion. The move is part of a broader debt management strategy aimed at maintaining external liquidity while honoring bilateral obligations.
Officials revealed that the Ministry of Finance had not initially factored in these repayments and had earlier assured the International Monetary Fund that Pakistan’s external financing requirements were fully met, largely due to expected rollovers from key partners including China, Saudi Arabia, and the UAE.
The $2 billion loan was originally obtained in 2018 during the tenure of former prime minister Imran Khan to stabilize dwindling foreign exchange reserves amid delays in securing an IMF agreement. Additionally, Pakistan recently repaid a separate $450 million UAE loan dating back to 1996–97, which had remained outstanding for nearly three decades.
Despite the large repayments, officials maintained that there would be no adverse impact on the country’s foreign exchange reserves, currently hovering around $15 billion, as the payments are being offset through new borrowing arrangements.
Pakistan is also expected to repay the remaining $1 billion UAE debt in the coming days, which will similarly be financed through additional Saudi loans. Riyadh is set to disburse another tranche next week, while also extending its existing $5 billion deposit with Pakistan for two years. However, the interest terms for the extension and new loans remain unclear.
The UAE’s request for repayment had created a financing gap of approximately $3.5 billion. Despite this, Islamabad had earlier assured the IMF that, under the $7 billion Extended Fund Facility (EFF), bilateral partners would continue rolling over short-term obligations, including loans, swaps, and deposits, until the programme’s expiry in September next year.
Under this framework, Saudi Arabia, the UAE, and China have committed to maintaining a combined $12.5 billion in deposits with the State Bank of Pakistan.
Earlier reports indicated that the UAE had rolled over $2 billion for only one month at an interest rate of 6.5%, despite Pakistan’s request for a longer-term extension at a reduced rate. Senior Pakistani officials, including Prime Minister Shehbaz Sharif and central bank governor Jameel Ahmad, had sought more favorable terms from Abu Dhabi.
Meanwhile, Saudi Arabia is also expected to extend its $1.2 billion annual oil facility on deferred payments, which Pakistan uses to import crude oil at an interest rate of around 6%.
In parallel, Pakistan raised $500 million through Eurobonds at a 7% interest rate, reportedly subscribed by institutional investors including Standard Chartered Bank.
Analysts note that while Pakistan’s economic buffers remain limited, continued diplomatic engagement with key partners has helped the country navigate external financing pressures. However, concerns persist that reliance on external borrowing could delay structural economic reforms and sustain cycles of low growth and recurring financial support.
Under IMF requirements, Pakistan continues to report all foreign debt transactions exceeding $3 million, including disbursements from multilateral institutions such as the Asian Development Bank, Islamic Development Bank, and the World Bank, as well as bilateral financing arrangements and external bond issuances.
