Pakistan Sets June Deadline for $4.8 Billion External Debt Repayment
Pakistan has finalized arrangements to repay $4.8 billion in external obligations by June, according to a local media report. This includes a significant $3.5 billion payable to the United Arab Emirates through three distinct financial facilities. The move follows Islamabad's decision to return $2 billion to Abu Dhabi by the end of the current month, an amount previously held as a deposit with the State Bank of Pakistan, accruing approximately 6 percent interest annually.
Financial Support and Eurobond Maturity
In a positive development, Pakistan has received assurances of more than $5 billion in financial support from two friendly countries to help manage its external financing requirements. This influx of funds is crucial as the country faces short-term repayment pressures, including a $1.3 billion Eurobond maturing this week. Issued for a 10-year period, this bond's repayment adds to the immediate financial burden, as reported by news agency PTI.
UAE's Changing Rollover Policies Amid Regional Tensions
Historically, the UAE rolled over such deposits on an annual basis. However, in December 2025, the facility was extended only for short durations—first for one month and then for two months—signaling tighter financial conditions. This shift occurred as regional tensions escalated following the US-Israel war on Iran, prompting the UAE to seek immediate return of funds. Earlier, after engagement by Pakistan's Deputy Prime Minister Ishaq Dar, the UAE agreed in principle to a short-term rollover of the $2 billion deposit for two months, extending it until April 17, 2026.
Previously, two separate $1 billion tranches maturing on February 16 and February 22 were rolled over for one month each. Another $1 billion tranche is scheduled to mature in July 2026, highlighting the ongoing financial negotiations between the two nations.
Foreign Office Clarifies Repayment as Routine Transaction
The Abu Dhabi Fund for Development has placed a total of $3 billion with the State Bank of Pakistan in three tranches. Two tranches that matured in January were rolled over for one month, while the third will be addressed closer to its maturity date. On April 4, Pakistan's foreign office dismissed what it termed "misleading and unfounded" reports regarding the return of UAE debt, emphasizing that the repayment is a routine financial transaction.
"This is a routine financial transaction, and any attempt to portray it otherwise is erroneous and misleading," the foreign office stated in an official release. It further clarified that the deposits were established under bilateral commercial agreements and reflect "the UAE's strong support for Pakistan's economic stability and prosperity."
Broader External Deposit Strategy
For the current fiscal year, Pakistan is actively seeking rollovers of approximately $12 billion in external deposits. This includes around $9 billion from key allies Saudi Arabia and China, with contributions of $5 billion and $4 billion respectively, in addition to the UAE deposits. This strategic approach aims to bolster Pakistan's economic resilience amid global financial uncertainties.
