ISLAMABAD: Pakistan has finalized arrangements to repay more than $3 billion owed to the United Arab Emirates and a $1.3 billion Eurobond that is due to mature this week, according to Federal Finance Minister Muhammad Aurangzeb.
Speaking to reporters in Islamabad on Tuesday, the minister said the government had completed all preparations to ensure timely repayment of its financial obligations.
Pakistan is required to return over $3 billion to the UAE after Emirati authorities asked for repayment. In addition, a Eurobond worth $1.3 billion is reaching maturity this week, creating further pressure on the country’s foreign exchange reserves.
Muhammad Aurangzeb said Pakistan would honor all commitments and achieve the financing targets set for the current fiscal year. He added that the government is working closely with international lenders and financial institutions to maintain economic stability.
The finance minister stressed that Pakistan’s foreign exchange reserves would remain in line with targets agreed under the program with the International Monetary Fund. He said recent economic reforms and IMF-backed policies had helped improve confidence in Pakistan’s economy despite ongoing regional tensions.
Aurangzeb also revealed that the government is planning to raise fresh financing through commercial loans and bond issuances. He said discussions are underway with a consortium of banks to arrange commercial financing in the coming weeks.
The government is also preparing to revive plans for Pakistan’s first Panda bond issuance by the end of April. According to the finance minister, Pakistan aims to raise up to $1 billion through Panda bonds in the Chinese market. Because this would be the country’s first such issue, the process is taking longer than expected.
The UAE funds had been kept in Pakistan’s reserves as a deposit, for which the country was paying six percent interest. The loan was earlier renewed regularly under a rollover arrangement, but the terms became stricter in recent months.
Officials said the UAE had extended the $2 billion deposit for shorter periods, first by one month and then by two months, moving the repayment deadline to April. Although the repayment could temporarily reduce Pakistan’s reserves, the government believes it is necessary to maintain credibility and strengthen relations with the UAE.
