Pakistan in talks with Saudi Arabia, China for funding to settle $3bn UAE loan

Pakistan is seeking fresh financial support from Saudi Arabia and China to repay a $3 billion loan to the United Arab Emirates, after talks to extend the long-standing rollover arrangement failed, according to media reports.

The repayment, expected to be completed by April 23, would mark the first break in a rollover cycle that has been in place since 2018, when the UAE deposit was repeatedly renewed as part of Pakistan’s external financing support framework.

The loan carried an estimated 6% interest rate and was earlier shifted from annual renewals to monthly extensions before Islamabad opted to clear the liability in full, sources told international media.

The development comes as Pakistan continues to manage external financing pressures under its programme with the International Monetary Fund (IMF), which requires sustained rollover of bilateral deposits to maintain external stability. The government is targeting foreign exchange reserves above $18 billion by June, while reserves held by the State Bank of Pakistan (SBP) stood at $16.40 billion for the week ended April 3, 2026.

To bridge the gap, discussions are underway with Saudi Arabia and China for support exceeding $3.5 billion, while separate reports suggest broader regional assistance, including potential contributions from Qatar, could lift total inflows to around $5 billion.

The need for alternative arrangements emerged after the UAE reportedly sought a rollover period of less than a year, a condition Pakistan did not accept. Despite the breakdown in extension talks, the Ministry of Foreign Affairs has described the repayment as a routine financial transaction.

The financing push coincides with deepening economic engagement between Islamabad and Riyadh, highlighted by a recent visit of Saudi Finance Minister Mohammed bin Abdullah Al-Jadaan to Pakistan, where he met Prime Minister Shehbaz Sharif.

Meanwhile, Pakistan is also strengthening economic coordination with Beijing as it prepares for the next phase of the China-Pakistan Economic Corridor, a flagship bilateral investment framework.

The developments underscore Pakistan’s continued reliance on coordinated Gulf and Chinese financing channels to manage short-term external repayment pressures and maintain IMF-linked reserve targets.