Pakistan settles $1.43bn Eurobond, faces fresh $3.5bn UAE repayment schedule

Pakistan’s external account is set to face renewed pressure this month as the country prepares to repay $3.5 billion in loans to the United Arab Emirates (UAE), raising concerns about reserve adequacy and compliance with the International Monetary Fund (IMF) programme.

According to a Reuters report citing two government officials, Pakistan will repay $450 million during the current week, followed by two larger tranches of $2 billion on April 17 and $1 billion on April 23. The loans, some dating back to the late 1990s and rolled over multiple times, carry an interest rate of around 6.5%.

The foreign ministry, responding to speculation, rejected claims that the repayment decision was linked to geopolitical tensions in the Middle East, stating only that the State Bank of Pakistan (SBP) would begin the repayment process.

Separately, the central bank confirmed on Wednesday that it had successfully repaid $1.43 billion against a maturing Eurobond. The payment was executed on April 7, 2026, one day ahead of the bond’s maturity date of April 8.

The SBP said the repayment included $1.3 billion in principal, with the remaining amount covering interest. Funds were transferred to the agent bank for onward distribution to bondholders on the maturity date.

Pakistan’s foreign exchange reserves remain under close watch amid the heavy repayment schedule. As of the week ended March 27, reserves held by the SBP stood at $16.38 billion, while commercial banks held net foreign reserves of $5.41 billion, bringing total national reserves to $21.79 billion.