UAE rolls over $2bn Pakistan debt for one month at 6.5% interest

The United Arab Emirates (UAE) has agreed to temporarily extend $2 billion in loans to Pakistan for one month.

The move provides short-term relief to Pakistan’s foreign exchange reserves as talks continue on a longer rollover arrangement.

According to officials, the amount consists of two separate loans of $1 billion each that matured on January 16 and January 22. Both have now been extended for a month to give both sides more time to negotiate the duration and cost of a longer extension.

Pakistan is pushing for a rollover period of two years with an interest rate closer to 3%.

Citing sources, media reports said that Islamabad is preparing another formal request to the UAE. They warned that if the loans are repaid instead of rolled over, it would open up a financing gap that would have to be covered through other means.

Under Pakistan’s $7 billion programme with the International Monetary Fund, the UAE, Saudi Arabia and China have pledged to keep a combined $12.5 billion in deposits with the State Bank of Pakistan until the programme concludes in September next year.