SBP governor: UAE $2 billion loan now on monthly rollover, reserves hit $16 billion

The State Bank of Pakistan said on Wednesday that the United Arab Emirates (UAE) is not demanding repayment of a $2 billion loan, but has moved it from an annual to a monthly rollover.

SBP Governor Jameel Ahmad briefed the National Assembly’s Standing Committee on Finance, providing an update on Pakistan’s economic position, including foreign debt, exports, inflation, and reserves.

“The UAE is not asking for repayment of $2 billion. The only difference is that the loan, previously rolled over annually, is now rolled monthly,” he said. Ahmad noted that initial debt servicing had reached $4 billion but has now been reduced.

Sources said the UAE rolled over two $1 billion loans maturing in January 2026 for one month, giving time to discuss tenor and interest rates. Under the $7 billion International Monetary Fund programme, UAE, Saudi Arabia, and China maintain $12.5 billion in cash deposits with the SBP until the programme ends in September 2027.

Ahmad recalled the UAE first provided $2 billion in 2018 and another $1 billion in 2023. Interest payments currently total about $130 million annually, up from 3% in 2018 to 6.5% last year. Pakistan has requested the rate be reduced back to 3%.

On exports, Ahmad said pressure persists due to declining global food prices, including a $1 billion drop in rice exports, but the situation is manageable. Inflation is projected between 5% and 7% in 2026.

He highlighted that strategic measures cut the current account deficit from $17.5 billion in 2022 to just 1% of GDP in 2023, producing a $2 billion surplus—the first in 14 years. Foreign exchange reserves have climbed from $2.8 billion to over $16 billion, with targets of $18 billion by June 2026 and $20 billion by December.

External debt has risen from $55 billion in 2016 to $103 billion; total debt stands at $148 billion, with the federal government’s share around $103 billion. Ahmad emphasized export financing schemes remain in place and attributed export decline to global factors and IMF programme constraints.

He assured the committee that, despite IMF-related limitations on subsidies and rebates, the central bank continues to implement policies to maintain economic stability and strengthen Pakistan’s financial position.