Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, announced on Tuesday that Pakistan has finalized arrangements to repay debts owed to the United Arab Emirates (UAE) along with maturing Eurobonds. The country faces a repayment obligation exceeding $3 billion to the UAE following requests from Emirati authorities, while a $1.3 billion Eurobond is also due to mature this week.
Speaking in Islamabad, the finance minister expressed confidence in the preparations, affirming that Pakistan will honor all its debt commitments on time. He further stated that the financing goals set for the current fiscal year are on track to be met as planned.
Aurangzeb highlighted the importance of policy formulation in light of ongoing regional tensions. He assured that foreign exchange reserves will be stabilized and maintained targets agreed upon with the International Monetary Fund (IMF). Meanwhile, preparations continue for securing commercial financing and bond issuances, with ongoing discussions involving a consortium of banks to arrange commercial funding.
In a significant development, the government plans to resume efforts by the end of April to issue Panda bonds, aiming to raise up to $1 billion. As this would mark Pakistan’s first Panda bond issuance, the process is taking additional time to ensure proper execution.
The finance minister also noted that the government is carefully evaluating the potential economic impact of regional geopolitical tensions. He credited the economic policies developed in coordination with the IMF for helping to guide the economy in a positive direction. Key economic decisions and budget preparations are expected to be undertaken in the coming days.
Regarding the UAE loan, it has been held in Pakistan’s account as a safe deposit, with Pakistan paying an interest rate of 6 percent on the deposited amount. Initially structured as a rollover facility, this arrangement allowed the funds to remain within Pakistan’s reserves for a defined period. However, in recent months, rollover terms became more restrictive, with the UAE extending the $2 billion deposit for shorter durations instead of the usual one-year period. At one point, the facility was rolled over for just one month, followed by a two-month extension, pushing repayment deadlines into mid and late April.
While the repayment may place short-term pressure on foreign exchange reserves, officials emphasize that it is being managed within a broader financial strategy aimed at maintaining Pakistan’s credibility and strengthening bilateral relations with the UAE.
