Islamabad, April 3, 2026 – Pakistan has decided to return a $2 billion loan to the United Arab Emirates by the end of April, according to official sources, amid evolving financial and geopolitical developments.
The funds, which were placed with the State Bank of Pakistan (SBP) as a deposit, carried an interest rate of around 6%. In previous years, the UAE had routinely rolled over the deposit annually, providing critical support to Pakistan’s foreign exchange reserves.
Short-Term Extensions End Amid Regional Tensions
However, the rollover pattern changed in recent months. In December 2025, the UAE extended the deposit initially for one month and later for an additional two months. The latest extension is set to expire on April 17, 2026.
Sources indicate that Abu Dhabi has now requested repayment of the full amount, reportedly influenced by recent geopolitical tensions in the Middle East following the US-Israel conflict with Iran.
Earlier, in February 2026, Pakistan secured a short-term rollover after diplomatic engagement led by Ishaq Dar, who contacted UAE authorities to ensure temporary financial continuity.
UAE Deposits and Maturity Timeline
The $2 billion loan forms part of a broader $3 billion facility extended by the Abu Dhabi Fund for Development. The funds were deposited with the SBP in three tranches of $1 billion each.
Two tranches matured in January 2026 and were rolled over for one month, while the third tranche of $1 billion is scheduled to mature in July 2026. Officials say discussions on rolling over the remaining amount will take place closer to its maturity date.
Pakistan Seeks External Financial Support
For the current fiscal year, Pakistan is aiming to secure rollovers of approximately $12 billion in external deposits to maintain foreign exchange stability. This includes around $9 billion from key allies such as Saudi Arabia and China.
Out of this, Pakistan expects about $5 billion from Saudi Arabia and $4 billion from China, alongside the $3 billion support from the UAE.
Economic Implications
The repayment of $2 billion could put pressure on Pakistan’s foreign exchange reserves, which remain sensitive to external financing flows. Analysts believe the move highlights the country’s continued reliance on friendly nations for balance of payments support.