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The United Arab Emirates (UAE) is on the verge of granting Pakistan an additional year to repay a 2 Billion Dollar Loan, responding to the request from caretaker Prime Minister Anwaar-ul-Haq Kakar. Currently in negotiation, Pakistan’s Ministry of Finance expresses confidence in reaching an agreement within the week.
This mirrors a similar scenario from January 18, 2023, when the UAE extended the repayment of a 2 Billion Dollar Loan upon the request of then-Prime Minister Shehbaz Sharif. Initially, the UAE had deposited $3 billion in the State Bank of Pakistan, with $1 billion due on January 17 and the remaining $1 billion on January 23.
With approaching loan repayment deadlines, the Ministry of Finance remains optimistic, drawing on past successful negotiations as a diplomatic precedent between the two nations. If granted, this extension would offer Pakistan crucial fiscal breathing room.
Read Also: Dr. Shamshad Akhtar Blames Past Governments for Surge in Forex Borrowing and Foreign Debt
As of January 5, 2024, the State Bank of Pakistan holds foreign currency reserves totaling $8.155 billion, a slight decrease from $8.221 billion on December 29, 2023. Despite this dip, recent sessions have shown an overall increase in central bank reserves by over $1 billion. This financial stability strengthens Pakistan’s negotiating position, showcasing its resilience in navigating economic challenges.
Ongoing negotiations between Pakistan and the UAE highlight the significance of diplomatic and financial cooperation. The outcome not only affects Pakistan’s short-term fiscal obligations but also shapes the dynamics of their economic relationship with the UAE.