- Refunds include 6% interest on deposits in the UAE.
- Saudi Arabia extends support for deposit maturities worth $3 billion.
- The external financing gap is likely to widen after repayments.
The State Bank of Pakistan (SBP) said on Friday it had repaid $1 billion to the Abu Dhabi Fund for Development (ADFD), completing the return of $3.45 billion in UAE deposits after clearing $2.45 billion last week.
In a post on X, the central bank said the last payment was made on April 23, marking the full repayment of deposits made by the UAE.
“This completes the repayment of total deposits of $3.45 billion to the UAE,” the SBP said.
Previously, on April 18, the central bank had confirmed that the government had returned $2 billion in debt to the UAE. An SBP spokesperson had said the amount was kept with the central bank as a safe deposit.
The repayments come as Pakistan manages pressure on its external financing position, and the funding gap is likely to widen following the return of deposits from the UAE, along with a 6% interest payment.
Pakistan has also recently repaid $1.43 billion of foreign debt, including a $1.3 billion Eurobond.
The development follows an agreement with Saudi Arabia to extend the maturity of a $3 billion deposit placed with the SBP. The central bank had also said earlier this month that it received $2 billion from the kingdom dated April 15, 2026.
Finance Minister Muhammad Aurangzeb had earlier said Pakistan was considering Eurobonds, loans from other countries and commercial debt to replace the UAE’s loan facility and manage foreign reserves.
“All options are on the table,” Aurangzeb said when asked if the government was in talks with Saudi Arabia for a loan that could replace the UAE fund.
Speaking on the sidelines of the IMF and World Bank spring meetings, he said Pakistan could manage all debt repayments and reserves remained at around 2.8 months to cover imports.
Maintaining at least that level, the finance czar said, would be “an important aspect of our overall macroeconomic stability as we move forward.”
“We are looking at Eurobonds, Islamic sukuk, rupee-linked bonds settled in dollars,” Aurangzeb said, adding that Pakistan hoped to issue Eurobonds this year and was also exploring commercial loans.
He also said the impact of the ongoing war in the Middle East meant Pakistan needed to consider a strategic oil reserve and a faster shift to renewable energy.
Aurangzeb said Pakistan had not yet requested any addition or change to its $7 billion IMF lending program due to economic crises from the war in the Middle East, but added it remained a possible option depending on developments in the coming weeks.
The IMF board is likely to approve the latest tranche of loans later this month or early next month, which would unlock just under $1.3 billion through the Extended Fund Facility and the Resilience and Sustainability Facility.
