By Staff Reporter
ISLAMABAD: Pakistan is negotiating with Saudi Arabia and China to secure funding for the repayment of roughly $3 billion owed to the United Arab Emirates, Bloomberg reported on Monday.
The move follows the first failure in seven years by Islamabad to reach agreement with Abu Dhabi on rolling over the debt, forcing Pakistan to line up alternative sources of financing, the news agency said. The amount of support under discussion with Riyadh and Beijing exceeds $3.5 billion, according to the report.
The UAE had pushed for a shorter rollover period of less than one year, a condition Pakistan rejected. Pakistan’s Ministry of Foreign Affairs described the repayment as a “routine financial transaction”. The $3 billion facility, carrying interest of around 6 percent a year, has been rolled over repeatedly since 2018. Earlier this year it was switched from annual to monthly extensions before Islamabad decided to repay the full amount, with clearance expected by April 23.
The repayment comes as Pakistan aims to lift its foreign exchange reserves above $18 billion by June under a $7 billion International Monetary Fund programme that requires existing bilateral deposits to be rolled over. On Sunday, Turkey’s Anadolu Agency, citing Pakistani sources, reported that Saudi Arabia and Qatar had agreed to provide Islamabad with $5 billion in financial assistance. The support is intended to ease pressure on the country’s reserves while it meets external payment obligations through June, the agency said.
Foreign exchange reserves held by the State Bank of Pakistan stood at $16.40 billion in the week ended April 3, according to central bank data. Pakistan and Saudi Arabia have steadily deepened economic and security ties in recent months, even as relations between Saudi Arabia and the UAE have frayed. Saudi Finance Minister Mohammed bin Abdullah Al-Jadaan met Pakistani Prime Minister Shehbaz Sharif in Islamabad on Friday night. Pakistan also maintains close economic relations with China and is working to launch the next phase of the China-Pakistan Economic Corridor.
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