Pakistan to Repay $2 Billion UAE Safe Deposit by Month-End.
Pakistan UAE debt repayment
In a significant shift for Pakistan’s external debt management, the federal government has confirmed it will repay a $2 billion “safe deposit” to the United Arab Emirates (UAE) by the end of April 2026. This repayment marks a strategic departure from the traditional cycle of “rollovers” that have historically characterized Pakistan’s bilateral financial support.
Key Financial Details
The decision by the Ministry of Finance aims to reduce the burden of high-interest debt amid a changing geopolitical landscape:
- High Interest Costs: Pakistan has been paying an interest rate of approximately 6% to 6.5% on this deposit, making it a relatively expensive facility in the current economic environment.
- Shift in Rollover Policy: While the UAE typically provided annual rollovers, the terms were recently shortened to monthly extensions starting in December 2025.
- Reserve Liquidity: With total foreign exchange reserves currently exceeding $21 billion, the State Bank of Pakistan (SBP) maintains sufficient liquidity to fulfill this repayment without immediate default risk.
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