Pakistan has formally requested the United Arab Emirates (UAE) to extend the rollover of $2 billion in deposits to prevent a decline in the country’s foreign exchange reserves held by the State Bank of Pakistan just before the general elections on February 8. This development has coincided with an upcoming meeting of the International Monetary Fund (IMF) Executive Board in Washington, D.C., where the release of the second tranche of $700 million for Pakistan under the $3 billion Standby Arrangement (SBA) program is expected to be discussed.
Sources have confirmed that Pakistan has also made a formal request for an additional $1 billion Saudi Oil Facility (SOF) on deferred payment, and negotiations are currently underway to finalize the terms and conditions. The previous SOF of $100 million per month from Saudi Arabia expired in December 2023, and discussions are ongoing to renew the facility.
The rollover of deposits from Saudi Arabia, the UAE, and China, along with commercial refinancing and additional SOF from Saudi Arabia, is part of the financing plan outlined by the Pakistani government under the IMF program. Pakistan is facing external debt servicing requirements of $24.8 billion, including a $13 billion rollover and commercial refinancing. The government aims to secure these funds to avoid defaulting on external loan repayments and obligations.
There is optimism within Pakistani authorities that they will successfully secure the rollover of $2 billion deposits from the UAE. Caretaker Prime Minister Anwaar-ul-Haq Kakar has reportedly written a letter to UAE President Mohamed bin Zayed Al Nahyan, formally requesting the rollover of the deposits.
Two separate deposits, amounting to $3 billion, are set to mature in January, with one due on January 17 and the other on January 20. The foreign exchange reserves held by the State Bank of Pakistan were reported at over $8.2 billion as of December 29, representing a more than five-month high. The government is hopeful for further enhancement of reserves after the anticipated approval of a loan from the IMF. The IMF Executive Board is scheduled to consider Pakistan’s request for the completion of the first review and the release of the second tranche of $700 million on January 11.
