ISLAMABAD: Government of Pakistan is reported to have finalized arrangements to repay a total of $4.8 billion in external debt by the end of June, with a major chunk of payments scheduled for the current month, a strategy that appears to follow shift in regional financial dynamics and the maturation of long-term sovereign instruments.
Media reported privy to developments taking place in the background citied high-level financial sources as saying despite the pressure on foreign exchange reserves, Pakistan has confirmed that it has already “arranged” the necessary $4.8 billion through alternative channels and internal management, a proactive approach intended to signal stability to international lenders and the International Monetary Fund (IMF).
Reports indicate Pakistan has successfully arranged for the immediate repayment of $3.3 billion within this month. This includes:
– $2 Billion to the UAE: Following a request for the immediate return of funds from Abu Dhabi, Pakistan will repay a $2 billion deposit held by the State Bank of Pakistan.
– $1.3 Billion Eurobond: The government will also retire a $1.3 billion Eurobond, which has reached its maturity after completing a 10-year term.
The decision to return the UAE funds marks a departure from years of “rollover” practices. It may be recalled here that historically, the UAE provided these funds to support Pakistan’s balance of payments, rolling them over annually at an interest rate of approximately 6%.
However, background reports indicate that the UAE recently shifted to short-term extensions—moving from annual renewals to one- and two-month rollovers. This change prompted Islamabad to opt for a full repayment to “remove doubts around the future of the deposits” and maintain national dignity. Sources suggest the UAE’s request for immediate return may be linked to evolving geopolitical tensions in the Middle East following the recent US-Israel-Iran conflict.
In total, Pakistan is scheduled to pay $3.5 billion to the UAE across three different financial forums throughout the period.
The Ministry of Finance remains confident that the arranged payments will be executed seamlessly before the June deadline, ensuring Pakistan meets its international obligations without default.
