Pakistan Returns Final $1 Billion Deposit to UAE, SBP Confirms
Pakistan has completed another major external repayment.
The country has returned the final $1 billion deposit to the United Arab Emirates (UAE), with the State Bank of Pakistan (SBP) confirming the transaction as part of ongoing debt obligations.
This marks the completion of repayments tied to a broader $3.5 billion UAE deposit arrangement, which had been supporting Pakistan’s foreign exchange reserves for years.
What Was Repaid — and Why
The UAE funds were held as a safe deposit with the SBP, commonly used to support Pakistan’s balance of payments and stabilize reserves.
- Total UAE exposure: $3.5 billion
- Latest repayment: $1 billion (final tranche)
- Earlier repayment: $2 billion returned earlier this month
Unlike previous years, when such deposits were regularly rolled over, the UAE requested repayment amid changing regional and financial conditions.
How Pakistan Managed the Repayment
The repayment didn’t happen in isolation.
Pakistan recently received $2 billion from Saudi Arabia, which helped offset the impact on foreign exchange reserves.
Officials say the repayments were planned, allowing the country to meet obligations without causing immediate instability in reserves.
Impact on Forex Reserves
Despite the outflow, authorities have indicated that reserves remain stable for now.
- Reserves are hovering around 2.8–3 months of import cover
- Target remains around $18 billion under IMF programme goals
However, repayments like these still highlight how sensitive Pakistan’s reserves are to external obligations.
Why This Matters Right Now
The timing is important.
Pakistan is currently:
- Managing high external debt repayments
- Working within a $7 billion IMF programme
- Relying on support from friendly countries
Returning the UAE deposit reduces short-term liabilities but also removes a financial buffer that had been supporting the economy.
What Comes Next
With the UAE facility now settled, Pakistan is exploring alternatives.
Officials have already indicated plans to:
- Raise funds through Eurobonds and Sukuk
- Seek commercial loans
- Continue bilateral support from allies
The focus now shifts to maintaining reserves while meeting upcoming repayment schedules.
