Finance Minister Ishaq Dar confirmed on Thursday that the Abu Dhabi Fund for Development (ADFD) has rolled over their deposit of $2 billion with the State Bank of Pakistan (SBP).
The finance minister made the announcement in a tweet on his official Twitter handle.
“Abu Dhabi Fund for Development (ADFD) has rolled over their deposit of $2billion with State Bank of Pakistan, as discussed by PM Shehbaz Sharif with His Highness the President of UAE during last week’s official visit. Long live Pak-UAE friendship!” read the tweet.
Abu Dhabi Fund for Development (ADFD) has rolled over their deposit of
$2billion with State Bank of Pakistan, as discussed by #PM @CMShehbaz with His Highness the President of UAE during last week’s official visit to 🇦🇪!
Long live Pak-UAE friendship!
— Ishaq Dar (@MIshaqDar50) January 18, 2023
Last week, the United Arab Emirates (UAE) agreed to provide a $3 billion lifeline to Pakistan in the shape of a rollover of the existing debt and new financing – helping Islamabad avoid defaulting on its loans for a couple of more months.
The development comes as the country faces a daunting challenge to make $13 billion debt repayments in six months.
The Gulf state made the decision to defer the maturing $2 billion and hand over another $1 billion in additional loan to Pakistan during a meeting between Prime Minister Shehbaz Sharif and UAE President Sheikh Mohamed bin Zayed Al Nahyan, according to the PM’s Office.
The $3 billion lifeline has provided some breathing space to Pakistan, but it has not permanently ended the threat of sovereign default due to huge external debt repayments with less than $4.3 billion reserves in hand.
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Pakistan is required to make over $13 billion in external debt repayments from January to June 2023 and the UAE’s decision will lower the needs by less than one-fourth of the total.
The government will have to strive hard for the revival of the International Monetary Fund (IMF) loan programme if it wants the default threat to abate permanently.