Pakistan to Repay $2 Billion to UAE Amid Economic Pressures

Pakistan has announced its decision to repay $2 billion to the UAE by the end of April, following a request amid rising tensions in the Middle East. While the country holds over $21 billion in foreign reserves, it faces mounting pressure to secure additional financing. This repayment adds to the financial strain as Pakistan navigates high inflation and public protests over fuel prices. The need for external support remains critical, with significant amounts required from Saudi Arabia, China, and the UAE. Read on to explore the implications of this financial decision.

By Narendra Chaudhary Apr 4, 2026, 13:02 IST

Pakistan's Financial Commitment to the UAE

In a recent development, Pakistan has agreed to return $2 billion to the United Arab Emirates by the end of this month, following a direct request from the UAE government. This amount was initially deposited with Pakistan’s State Bank to assist with the nation’s balance of payments and had been rolled over regularly until now. However, due to the escalating crisis in the Middle East, particularly the US-Israel conflict involving Iran, the UAE has requested the immediate return of these funds.

According to sources, Pakistan is set to repay the entire sum to Abu Dhabi before the end of April, with the previous extension only valid until April 17. The country has been incurring an interest rate of approximately 6% on this deposit, which the UAE had previously renewed annually.

Current Status of Pakistan's Foreign Reserves

Pakistan's foreign exchange reserves currently exceed $21 billion. While the nation is capable of repaying the $2 billion, it continues to face significant pressure to secure new external financing in the upcoming months. For the current fiscal year, Pakistan requires either rollover or new support totaling around $12 billion, which includes:

$5 billion from Saudi Arabia
$4 billion from China
$3 billion from the UAE (now being repaid)

This repayment further complicates Pakistan's financial landscape, which is already strained by the global energy crisis and increasing fuel prices. The situation is particularly challenging as the country grapples with high inflation, public unrest over rising petrol costs, and disruptions in oil supplies through the Strait of Hormuz.