- The UAE loan payment is due at the end of the month.
- The Saudi minister visited Islamabad recently.
- China remains Pakistan’s largest bilateral creditor.
Pakistan is holding talks with Saudi Arabia and China to secure financial support as it prepares to repay a loan of about $3 billion to the United Arab Emirates, according to people familiar with the matter. Bloomberg reported.
the conversations, The news They involve loans and investments, Bloomberg reported, said the people, who asked not to be identified because the conversations are private. The amount of support being discussed is more than $3.5 billion, one of the people said.
Pakistan failed to reach a deal with the United Arab Emirates to refinance debt for the first time in seven years. Islamabad will now repay the amount later this month, putting significant pressure on its foreign exchange reserves, which stand at about $16 billion, enough to cover just three months of imports.
Pakistan’s Finance Ministry, Foreign Ministry and Saudi Arabia’s Media Ministry did not immediately respond to requests for information. Saudi Arabia’s Finance Minister Mohammed Al-Jadaan was in Islamabad on April 10 for talks with officials just before Pakistan hosted high-stakes peace talks between the United States and Iran this weekend. In his meeting with the Saudi minister, Pakistan Prime Minister Shehbaz Sharif expressed “a strong commitment to expand its cooperation with the kingdom in all spheres, particularly in trade, investment and economic development,” according to an official statement from his office.
The two countries have steadily increased their economic and security ties in recent months, at the same time as relations between Saudi Arabia and the United Arab Emirates have frayed. Saudi Arabia announced over the weekend that Pakistan had sent fighter jets to the kingdom under its mutual defense pact to bolster security in the country and the region.
Iran has targeted the kingdom and other Middle East neighbors with missile attacks in retaliation for its ties to the United States.
The UAE has not revealed the reasons why it requested its loan from Pakistan. Pakistan’s Foreign Ministry has sought to play down media speculation that it was linked to a possible political fallout between the two countries, saying last week that the move was a “routine financial transaction.”
A person familiar with the matter said the UAE had requested an extension period of less than a year, which Pakistan did not agree to. Pakistan also has close economic ties with China, its largest lender, to whom it owes more than $25 billion. Islamabad is trying to launch the next phase of the China-Pakistan Economic Corridor under Beijing’s Belt and Road Initiative as a follow-up to the around $60 billion first phase started more than a decade ago.
The International Monetary Fund (IMF) also reached an initial agreement with Pakistan last month for the disbursement of a loan installment of around $1.2 billion out of a $7 billion financing program. Pakistan has received about two dozen bailouts from the global lender since the 1960s.
