Pakistan faces tight external repayment window as $1.3bn Eurobond matures, $4.8bn due by June

Pakistan is entering a critical external repayment phase this month, with a $1.3 billion Eurobond maturing this week and total external obligations of $4.8 billion scheduled for settlement by June, according to official sources.

The repayment burden includes $3.5 billion owed to the United Arab Emirates under multiple financing facilities, underscoring mounting short-term financing pressures as the government works to safeguard foreign exchange reserves.

Officials confirmed that the federal government has decided to return $2 billion to Abu Dhabi by the end of the current month. The amount had been placed with the State Bank of Pakistan (SBP) as a deposit, on which Pakistan has been paying approximately 6 percent annual interest.

The UAE had previously rolled over similar deposits on a routine basis. However, the rollover pattern changed in December 2025, when extensions were granted only for shorter periods — first one month and later two months — indicating tightening financial conditions and more cautious liquidity management by lenders.

Sources said the most recent rollover of the $2 billion facility was secured following engagement by Deputy Prime Minister Ishaq Dar, extending the maturity to April 17, 2026, after which the funds are now scheduled to be repaid.

In parallel, the Abu Dhabi Fund for Development currently maintains $3 billion in deposits with the SBP across three tranches. Two tranches that matured earlier this year were rolled over for one month, while another tranche is set to mature in July 2026.

Officials also disclosed that Islamabad has received assurances of more than $5 billion in additional financial support from two friendly countries to help manage external financing requirements during the current fiscal year.

Separately, Pakistan is seeking rollover of approximately $12 billion in external deposits from major bilateral partners, including about $5 billion from Saudi Arabia and $4 billion from China, alongside existing facilities with the UAE.

Responding to speculation surrounding the repayments, the Ministry of Foreign Affairs Pakistan stated on April 4 that the return of UAE deposits is a routine financial transaction carried out under mutually agreed bilateral arrangements. The ministry emphasized that the funds were being repaid through the central bank in line with contractual terms and should not be interpreted as an extraordinary development.