Pakistan Repays $3.45 Billion Loan to UAE After Saudi Aid Boost

The State Bank of Pakistan confirms the completion of USD 3.45 billion in UAE deposits repayment, aided by Saudi financial assistance. The move reduces immediate external pressure while highlighting ongoing fiscal challenges and reliance on Gulf liquidity alongside IMF support.

Pakistan has cleared USD 3.45 billion in deposits owed to the United Arab Emirates, the State Bank of Pakistan said, easing an immediate external repayment pressure but underlining ongoing strain on Islamabad’s finances as Pakistan manages debt obligations and seeks liquidity support from key Gulf partners and global lenders.

The State Bank of Pakistan confirmed that the final instalment went out on Thursday, following earlier transfers. The central bank said the payments settled all outstanding deposits that the UAE had placed with Pakistan, ending a facility that had supported Pakistan’s foreign exchange reserves for several years.

Pakistan UAE loan repayment linked to Abu Dhabi Fund transfers

Detailing the transaction, the central bank stated: "State Bank of Pakistan repaid a deposit of USD 1 billion to Abu Dhabi Fund for Development (ADFD), UAE on April 23, 2026. Deposits of USD 2.45 billion were repaid last week. This completes the repayment of total deposits of USD 3.45 billion to UAE," confirming the full Pakistan UAE loan repayment.

The cleared deposits formed part of support that the United Arab Emirates extended in 2019. According to The Dawn newspaper, the money had been provided to help stabilise Pakistan’s balance of payments position at a time of intense pressure on the rupee and a widening current account deficit, tying into wider Pakistan UAE loan repayment arrangements.

Pakistan UAE loan repayment and Saudi financial assistance

The outflow followed closely after Saudi Arabia transferred USD 3 billion in assistance to Pakistan. The support arrived in two instalments, with the second tranche of USD 1 billion credited on April 21. A Reuters report said the Saudi funds were expected to help close the financing gap created by the Pakistan UAE loan repayment.

Pakistan had earlier struggled to extend the UAE facility. In March, Islamabad failed to secure a rollover of the USD 3.5 billion arrangement, the first such refusal in about seven years. That development raised concerns about near-term external financing, especially as the Pakistan UAE loan repayment timetable remained tight and non-negotiable.

Reports suggested the UAE had asked for rapid repayment after heightened tensions in West Asia linked to the US-Israel war on Iran. It remains unclear why the UAE suddenly pressed for the return of around USD 3 billion, which surprised Pakistani officials and led to speculation about diplomatic strain alongside the financial aspects of the Pakistan UAE loan repayment.

Pakistan’s foreign exchange reserves were estimated at about USD 16.4 billion as of March 27, reflecting a fragile buffer despite recent inflows that partly offset the Pakistan UAE loan repayment. Pakistan is operating under a USD 7 billion International Monetary Fund bailout, and IMF staff last month reached a staff-level agreement with Islamabad to release a USD 1.2 billion tranche, while analysts still flag external financing risks and challenging global market conditions.