The United Arab Emirates (UAE) has agreed to extend the rollover of a $2 billion deposit with the State Bank of Pakistan (SBP) for an additional two months, government sources confirmed on Friday.
The short-term extension comes as Pakistan navigates ongoing economic challenges, including negotiations with the International Monetary Fund (IMF) and efforts to stabilize foreign exchange reserves.
Loan Rollover Gives Temporary Relief to Pakistan
The $2 billion facility, initially provided by the UAE as a deposit to support Pakistan’s foreign reserves, was scheduled to mature this month. Islamabad had been seeking clarity on its status amid tight external financing pressures.
With the latest rollover agreement, Pakistan gains more time to shore up reserves and manage import financing without immediate repayment pressure.
Officials described the extension as a positive development, noting that it provides temporary relief as economic teams work to secure longer-term financing arrangements.
Context: IMF Review and Economic Challenges
Pakistan has been in ongoing discussions with the IMF over its extended fund facility (EFF) program. Securing rollover or fresh financing from friendly countries like the UAE helps ease some immediate balance-of-payments constraints while negotiations with the IMF continue.
Economic analysts say that while short-term extensions help cushion fiscal stress, Pakistan ultimately needs a comprehensive financing strategy to restore sustainable macroeconomic stability.
Reaction from Government Sources
A senior official in the Ministry of Finance welcomed the UAE’s decision, calling the rollover “a vote of confidence in Pakistan’s economic management.”
“We appreciate the continued support of the UAE. This extension gives us crucial breathing space at a difficult juncture,” the official said, without disclosing detailed terms of the agreement.
What Happens Next
With the rollover temporarily securing $2 billion of foreign exchange reserves, policymakers are expected to intensify talks with other friendly nations and multilateral lenders for additional support.
Observers say Pakistan’s ability to secure further rollovers or financing will be critical in the coming months as it seeks to avoid acute reserve depletion and maintain import cover.
