Pakistan plans $3 billion UAE repayment to boost reserves

ISLAMABAD: (Rizwan Abbasi) Pakistan has completed arrangements to pay $3 billion to the United Arab Emirates and it is likely that this amount will be paid in phases over the next week.

According to sources in the Ministry of Finance, along with this payment process, a strategy has also been developed to increase the State Bank’s foreign exchange reserves to $18 billion by June.

Sources say that the payment of $2 billion to the UAE is likely to be made on April 17, while the remaining $1 billion is planned to be paid on April 23. In addition, Pakistan has also repaid a nearly 30-year-old loan of $450 million to the UAE.

According to sources in the Ministry of Finance, the additional financial facility of $3 billion from Saudi Arabia is expected to reduce the pressure on Pakistan’s foreign exchange reserves. After this facility, the total volume of Saudi Arabia’s deposits for Pakistan will increase to $8 billion.

Sources say that Saudi Arabia is also likely to extend the facility for supplying oil on deferred payments in addition to deposits. At present, Saudi Arabia is providing Pakistan with an oil facility of about $100 million per month, while it is estimated that up to $1 billion in oil facilities will be provided during the current fiscal year. The current oil facility of $1 billion is about to expire soon.

Meanwhile, according to sources, Pakistan is likely to receive an installment of $1.21 billion from the International Monetary Fund (IMF) next month. A staff-level agreement has been reached between the IMF and Pakistan in this regard, while the final amount will be released after the approval of the IMF Executive Board.

According to sources in the Ministry of Finance, Pakistan also plans to issue bonds in the capital market this year, while work is also underway on a plan to issue panda bonds in the Chinese market. In addition, the option of borrowing from commercial banks is also under consideration.

According to sources, Pakistan currently has a total of $12 billion in deposits from friendly countries, including $5 billion from Saudi Arabia, $4 billion from China, and $3 billion from the United Arab Emirates.