Saudi Arabia Deposits USD 2 Billion as Pakistan Repays USD 2 Billion in Debt to UAE, Boosting Reserves
The State Bank of Pakistan (SBP) confirmed the return of USD 2 billion in debt owed to the United Arab Emirates (UAE) on Saturday. This repayment comes amid a significant strengthening of Pakistan's foreign exchange reserves, bolstered by a major new deposit from Saudi Arabia.Pakistan's financial stability remains a primary focus as the country handles complex debt repayments and large capital inflows. The recent transactions underscore the dynamic nature of the country's external financial buffers.
UAE Debt Repayment Pressures
The UAE confirmed that the government returned USD 2 billion in debt to the central bank. The SBP spokesperson confirmed that this amount was held as a safe deposit.Previously, the UAE had provided the fund to support the country's balance of payment. The central bank sources indicated that the UAE recently requested the immediate return of these funds, a measure linked to the recent situation in West Asia following the US-Israel war on Iran.
Insiders noted that Pakistan has been paying approximately 6 per cent interest on the amount owed to the UAE.
Saudi Arabia Boosts Foreign Reserves
A major stabilizing factor for Pakistan was the deposit made by the SaudiA Fund for Development (SFD). On Thursday, SFD deposited USD 2 billion of a total USD 3 billion with the SBP.This deposit follows an agreement announced on Friday, allowing for an extension in the maturity of the full USD 3 billion deposit.
The agreement, signed between the SFD and the SBP, provides for the extension of maturity for the placed deposit, according to the Ministry of Finance. The infusion significantly boosts the country's foreign reserves.
Managing External Rollovers and Reserves
The repayment requirement to the UAE was met amidst fresh pressure on the nation's external buffers. Officials confirmed that as of March 27, Pakistan's foreign exchange reserves stood at USD 16.4 billion.These reserves were noted by officials as sufficient to cover close to three months of imports.
Looking ahead, the country faced a crucial rollover need of approximately USD 12 billion for the current fiscal year. This requirement included USD 5 billion from Saudi Arabia, USD 4 billion from China, and USD 3 billion from the UAE.
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