Pakistan has decided to repay its entire $3.5 billion debt to the United Arab Emirates by April, in one of the largest external repayment schedules of the month.
According to official sources, the repayment plan includes $450 million this week, followed by $2 billion on April 17 and another $1 billion on April 23. The schedule includes a legacy loan dating back to 1996 to 1997, which is now being fully cleared after nearly three decades.
Officials said the loans had previously been rolled over at an annual interest rate of 6.5 percent, with part of the borrowing including $2 billion obtained in 2018 and an additional $1 billion deposit from 2023.
The repayment comes on top of a €1.3 billion Eurobond payment due this month, taking Pakistan’s total external debt servicing obligations for April to nearly $4.8 billion equivalent.
The State Bank of Pakistan currently holds around $16.4 billion in foreign exchange reserves, which they believe is sufficient to absorb the repayment pressure, according to analysts.
However, the move is likely to be closely watched by markets, as it could temporarily reduce reserve buffers at a time when Pakistan is also managing high oil import costs, Eurobond obligations, and upcoming IMF-related financing needs.