FO rubbishes 'misleading' commentary on UAE loan

The Foreign Office on Saturday dismissed "misleading and unfounded commentary" surrounding Pakistan's repayment of financial deposits to the UAE, clarifying that the move was a routine transaction carried out under agreed terms. The clarification comes after reports that Pakistan had decided to return $3.5 billion to the UAE before the end of the month, with a senior official indicating that Abu Dhabi had sought the immediate repayment of the amount. The deposits, originally extended in 2019 through the Abu Dhabi Fund for Development, were part of external financing support aimed at stabilising Pakistan's balance of payments and had since been rolled over multiple times. In a statement, Foreign Office spokesperson Tahir Andrabi said, "The deposits were placed under bilateral commercial agreements, demonstrating the UAE's strong support for Pakistan's economic stability and prosperity." He added that, in line with mutually agreed terms, the government, through the State Bank of Pakistan, was now returning the matured deposits. "This is a routine financial transaction, and any attempt to portray it otherwise is erroneous and misleading," he said. The development is significant given Pakistan's ongoing external financing needs under its International Monetary Fund (IMF) programme, which requires the country to secure around $12.5 billion in rollovers from key partners, including China, Saudi Arabia and the UAE, to maintain foreign exchange reserves. According to the senior official, the decision to return the deposits has ended lingering uncertainty over the UAE funds, which in recent months had only been extended for short periods, sometimes as little as one month. The latest data places Pakistan's central bank reserves at approximately $16.3 billion. A repayment of $3 billion would reduce these reserves by around 18 per cent, significantly weakening the country's external buffer and import cover. Reaffirming bilateral ties, Andrabi said, "Pakistan and the UAE share a longstanding, fraternal partnership built on trust and strategic cooperation across trade, investment, defence, and people-to-people ties," adding that the relationship had strengthened over time. "The people of Pakistan warmly cherish the pivotal role played by His Highness, the late Sheikh Zayed bin Sultan Al Nahyan, in forging this enduring friendship, as well as his special affection for Pakistan," he said. "Pakistan remains fully committed to further strengthening this enduring relationship for a shared, prosperous future," he added. Meanwhile, the Ministry of Finance said it was closely monitoring the situation. In a post on X, it stated that it was "continuously monitoring and managing Pakistan's external flows in order to ensure stable foreign exchange reserves". "The government of Pakistan remains committed to fulfilling all its external obligations," it added.