Islamabad: The United Arab Emirates has rolled over $2 billion of matured debt for one month at the current rate of 6.5 percent. This $2 billion is part of Pakistan’s total $16 billion foreign exchange reserves and Pakistan pays $130 million in interest annually at the current rate. This is the first time that the UAE has rolled over a loan for just one month, earlier it used to do so for a year. Federal and State Bank sources told The Express Tribune that the UAE has rolled over two loans of $1 billion each for one month, one loan was to mature on January 16 and the other on January 22. The loans were rolled over for one month to allow for further discussions on the loan tenure and interest rate. In December, the Governor of the State Bank requested a rollover from the UAE for two years at a 3% interest rate due to an improvement in the credit rating and a decline in global interest rates. Later, Prime Minister Shehbaz Sharif also requested the UAE President to extend the loan repayment period. He said that Pakistan is hopeful of a better deal with the UAE to avoid pressure on foreign exchange reserves. The gap created by the loan repayment will have to be filled from elsewhere. He said that in a few days the situation regarding the loan period and its maturity will become clear. The UAE gave a loan of $2 billion in 2018 at an interest rate of 3 percent, and there is a continuous rollover in case of non-repayment. In 2023, the UAE gave another loan of $1 billion, but increased the interest rate to 6.5 percent. The stability of the external sector depends on the rollover of existing loans, new loans from the IMF and the World Bank. When contacted, the spokesperson of the State Bank and the Ministry of Finance did not confirm the rollover of the loan for one month at the current interest rate. Under the $7 billion deal with the IMF, the UAE, Saudi Arabia and China have promised to keep a total cash deposit of $12.5 billion in the State Bank until the end of the program in September next year.
