Pakistan will repay a $2 billion loan to the United Arab Emirates by the end of April, sources said Friday, as the UAE seeks the immediate return of funds amid heightened tensions in the Middle East following the conflict between the US and Israel and Iran.
UAE Loan Repayment
- The $2 billion loan has been held as a safe deposit with the State Bank of Pakistan.
- Pakistan has been paying approximately 6% interest on the UAE loan.
- The UAE requested the funds be returned quickly due to the recent situation in the Middle East.
The funds were kept as a safe deposit with the State Bank of Pakistan (SBP). Pakistan has been paying around 6% interest on the loan. Previously, the UAE had routinely rolled over the deposit on a yearly basis.
In December 2025, the rollover was initially extended for one month, and then again for two months. Sources indicate the UAE recently requested the immediate return of the funds in light of the escalating situation in the Middle East following the US-Israel war on Iran.
In February, the UAE had agreed in principle to a short-term rollover of the $2 billion deposit, extending it for just two months, until April 17, 2026. This assurance came after Deputy Prime Minister Ishaq Dar contacted UAE officials.
Prior to that, the UAE had rolled over $2 billion for one month, with $1 billion maturing on February 16 and the remaining $1 billion on February 22. The Pakistani government had requested a two-year rollover and later submitted a fresh extension request.
In January, the UAE rolled over $2 billion for one month after the initial maturity date. A further tranche of $1 billion is due to mature in July 2026.
The Abu Dhabi Fund for Development has placed a total of $3 billion with the State Bank of Pakistan in three separate tranches. Two tranches of $1 billion each matured on January 17 and January 23 and were rolled over for one month. The third tranche of $1 billion is scheduled to mature in July and will be considered for rollover closer to that date.
Pakistan is currently seeking the rollover of approximately $12 billion in external deposits for the current fiscal year, including around $9 billion from Saudi Arabia and China – $5 billion from Saudi Arabia and $4 billion from China – in addition to the $3 billion from the UAE.
Discover more from Archyworldys
Subscribe to get the latest posts sent to your email.
