- UAE loan repayment due by end of month.
- The Saudi minister recently visited Islamabad.
- China remains Pakistan’s largest bilateral creditor.
Pakistan is in talks with Saudi Arabia and China for financial support as it prepares to repay a loan of around $3 billion to the United Arab Emirates, according to sources familiar with the matter. Bloomberg reported.
The talks, News The reports, citing Bloomberg, involve loans and investments, the sources said, asking not to be identified because the negotiations are private. The amount of support under discussion amounts to more than $3.5 billion, one of the sources said.
Pakistan has failed to reach an agreement with the United Arab Emirates to refinance debt for the first time in seven years. Islamabad will now repay the amount by the end of the month, straining its foreign exchange reserves, which stand at around $16 billion, enough to cover just three months of imports.
Pakistan’s finance ministry, Saudi Arabia’s foreign ministry and media ministry did not immediately respond to requests for information. Saudi Finance Minister Mohammed Al-Jadaan was in Islamabad on April 10 for talks with officials just before Pakistan hosts high-stakes peace talks between the United States and Iran this weekend. During his meeting with the Saudi minister, Pakistani Prime Minister Shehbaz Sharif expressed “his strong commitment to expanding cooperation with the kingdom in all areas, particularly in trade, investment and economic development,” according to an official statement from his office.
The two countries have continued to strengthen economic and security ties in recent months, even 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 as part of their mutual defense agreement to strengthen the security of the country and the region.
Iran has targeted the kingdom and other Middle Eastern neighbors with missile strikes in retaliation for their ties to the United States.
The UAE has not revealed the reasons for recalling its loan to Pakistan. Pakistan’s foreign ministry sought to play down media speculation that it was linked to a possible political fallout between the two countries, saying last week that it was a “routine financial transaction”.
A person familiar with the matter said the UAE had requested a rollover 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, a continuation of the roughly $60 billion first phase launched 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 of around $1.2 billion out of a $7 billion financing package. Pakistan has received about two dozen bailouts from the global lender since the 1960s.
