Pakistan's repayment of UAE deposits signals improving external stability: analysts

The reimbursement of matured long-term foreign deposits to the United Arab Emirates (UAE) reflects Pakistan’s improving external liquidity position, economic stability, and enhanced policy credibility, besides the capacity to honour its international obligations without compromising macroeconomic fundamentals, according to financial analysts. As of late March 2026, Pakistan’s total liquid foreign exchange reserves stood at approximately $21.79 billion, providing a solid buffer to manage external commitments. The repayment underscored the positive trajectory of the country’s external finances, built through sustained reforms and improved inflows. According to the official statistics, Pakistan’s foreign exchange reserves had plummeted to multi-year lows in 2022 amid balance-of-payments pressures and political instability, with State Bank of Pakistan (SBP) holdings dipping below $7 billion at one stage. “Since then, the Government of Pakistan and the SBP have implemented robust external account stabilisation measures and macroeconomic reforms, including close engagement with the International Monetary Fund (IMF) and bilateral partners. These efforts have successfully rebuilt external buffers,” according to a financial analyst. Read More: PSX closes above 151,000 mark after volatile session By the end of June 2025, SBP foreign exchange reserves had risen to about $14.51 billion, up from approximately $9.39 billion in June 2024. The recovery momentum has continued into 2026, with reserves rebounding to levels not seen since before the 2022 crisis. The trend signalled restored investor confidence and greater external sector stability. The analyst said that the fraternal ties with the UAE remained non-negotiable, and Pakistan’s clear capability to fulfil these commitments reinforced mutual trust rather than any strain. Earlier on April 4, a Foreign Office spokesperson, in a statement, had rejected the recent misleading and unfounded commentary regarding financial deposits from the UAE held with the State Bank. “The deposits were placed under bilateral commercial agreements, demonstrating the UAE’s strong support for Pakistan’s economic stability and prosperity. Accordingly, pursuant to mutually agreed terms, the Government of Pakistan, through the SBP, is now returning the matured deposits to the UAE. This is a routine financial transaction, and any attempt to portray it otherwise is erroneous and misleading,’ the spokesperson added. He said that Pakistan and the UAE shared a longstanding, fraternal partnership built on trust and strategic cooperation across trade, investment, defence, and people-to-people ties.