- Two-month extension granted at 6.5%.
- Insured deposit; formal approval is still awaited.
- A longer postponement is sought after negotiations with the IMF.
ISLAMABAD: The United Arab Emirates has agreed to renew a short-term deposit of $2 billion for Pakistan for a period of two months, News reported on Friday, as Islamabad prepares for negotiations with the International Monetary Fund (IMF).
This assurance was given to Pakistan when Deputy Prime Minister and Foreign Minister Ishaq Dar contacted senior UAE officials this week. A senior official confirmed that the UAE had agreed to the short-term postponement until April 17, 2026.
The development comes ahead of Pakistan’s upcoming review negotiations with the IMF for the third review and the release of the fourth tranche of $1 billion under the $7 billion Expanded Financing Facility (EFF).
“The UAE has granted the short-term refinancing at a rate of 6.5%,” senior official sources said, adding that formal approval for the relevant quarter was awaited and expected to be received at any time.
In response to a question, the Foreign Ministry spokesperson said he was not aware of the context or content of the statements made to the Standing Committee on Finance by Finance Ministry officials.
He could only confirm that the Deputy Prime Minister was seized of the matter and was playing a very positive role in coordinating and consulting with the relevant UAE authorities.
“The duration of the rollover is the prerogative of the depositor. Thanks to Dar’s positive role, we can say that the rollover is assured and the duration is not tied. Since the rollover continues, this matter remains under control,” the spokesperson said.
He also referred to the Finance Minister’s statements that there was no external financing gap in terms of Pakistan’s profile, particularly with regard to the country’s engagement with the IMF.
Previously, the UAE transferred more than $2 billion for just one month, with $1 billion maturing on February 16 and the remaining $1 billion on February 22.
The government had requested the UAE to roll over the deposit for two years and subsequently submitted a fresh request for extension of the facility. It was indicated in the UAE that after the IMF review negotiations, Islamabad would again approach the authorities to request a rollover of deposits for a longer term.
In January, the UAE rolled over $2 billion for a month after the amount expired. A third tranche of $1 billion is scheduled to mature in July 2026.
In December, the Ministry of Finance had prepared working papers and drafted a letter to the UAE government requesting the postponement of the entire $3 billion for one year. The government had hoped that refinancing would be secured in advance, as in previous cases, but the UAE initially only agreed to a one-month extension.
Finance Ministry officials last week were unable to give a clear assurance to a parliamentary committee that the entire $3 billion deposit would be refinanced, putting the onus on the Foreign Ministry.
The finance minister told the committee that Pakistan had provided the IMF with a clear external financing plan and that negotiations with the UAE authorities were continuing. He said bilateral agreements were on track and any changes in the situation would be communicated.
According to officials, the Abu Dhabi Fund for Development has placed $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 a month, while the third tranche of $1 billion is due to mature in July and will be renewed as it nears maturity.
In December, Saudi Arabia agreed to extend the maturity of its $3 billion deposit with the State Bank of Pakistan by one year. As part of a 2021 deal, Riyadh had placed $3 billion with Pakistan’s central bank.
For the current financial year, Pakistan is seeking to roll over around $12 billion in external deposits, 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 placed by the UAE.
