UAE assures rollover of $2 billion deposits to support Pakistan reserves, says DPM Dar

The United Arab Emirates (UAE) has assured Pakistan that it will roll over $2 billion in deposits placed with the State Bank of Pakistan, Deputy Prime Minister and Foreign Minister Ishaq Dar said on Wednesday.

Speaking to reporters in Islamabad, Dar dismissed speculation that the UAE would withdraw its deposits and said discussions were ongoing to finalise the rollover arrangements. He added that the new agreement is expected to be for a longer tenure than previous extensions.

The deposits are part of Pakistan’s efforts to maintain foreign exchange stability while managing external financing requirements.

Official data shows that Pakistan received $10.1 billion in foreign loans and debt rollovers during July–January of the current fiscal year. Of this amount, $5.1 billion came through fresh disbursements, while about $5 billion comprised extensions of existing deposits by bilateral and multilateral partners. The total inflow is $1.4 billion lower than the same period last year.

The status of the $2 billion UAE deposit had remained unclear as the facility matured in January and again this month without formal confirmation from the central bank. In contrast, Saudi Arabia extended a $3 billion deposit in December for another year through the Saudi Fund for Development, while China rolled over a $1 billion cash deposit earlier in the fiscal year. The IMF also disbursed a $1 billion tranche.

For FY2025-26, the government and the State Bank have projected more than $25 billion in total foreign inflows, including new borrowing and debt rollovers. Inflows during the first seven months represent around 40% of the annual target. The country faces maturities of $12.5 billion in cash deposits during the fiscal year and continues to rely on rollovers amid foreign exchange reserves of about $16 billion, which include borrowed deposits.

Multilateral lenders disbursed $2.1 billion between July and January. The Asian Development Bank provided $622 million, the World Bank released $828 million, and the Islamic Development Bank disbursed $502 million, including $484 million under an oil financing facility.

Foreign commercial borrowing stood at $142 million during the period, below budget estimates. However, the government has recently agreed to a $600 million facility from Standard Chartered Bank at an interest rate of 6.3%, while Saudi Arabia disbursed a $705 million oil facility at 6%.

Pakistan also received $269 million for the Chashma Nuclear Power Plant (C-5) and $1.5 billion through Naya Pakistan Certificates.

Plans to raise $400 million through sovereign bonds and $250 million via Eurobonds have not materialised so far. Announcements regarding Panda bonds have also not been implemented.

Responding to criticism over reliance on external borrowing, the Ministry of Finance said total external debt and liabilities stand at $138 billion. It stated that nearly 75% of external public debt consists of concessional and long-term financing from multilateral institutions and bilateral partners, around 7% comprises commercial loans, and another 7% relates to long-term Eurobonds. The ministry added that interest payments are increasing in line with global rate trends.