Pressure on Pakistan Increases Over UAE Loan

April 7, 2026

New Delhi: Debt-ridden Pakistan faces the challenge of repaying $3.5 billion to the United Arab Emirates this month, further jeopardizing its economic situation.

Concerns Over Depleting Foreign Exchange Reserves

This payment comes at a time when Pakistan’s foreign exchange reserves have reached a critical low. A senior minister confirmed this in a press briefing, raising concerns about the country’s ability to repay the debt.

Difficulties Increased Due to Non-Receipt of Rollover

The situation has become more serious because the UAE has reportedly refused to rollover this loan.

Until now, Pakistan has been easing payment pressure through such rollovers, but changing geopolitical circumstances, particularly US-Israel-Iran tensions, have influenced the UAE’s stance.

Impact on the Economy and the IMF Program

Economists say that withdrawing funds from reserves to repay debt could further weaken Pakistan’s economic situation. This could impact imports, currency stability, and external account management.

This situation comes at a time when Pakistan is attempting economic reforms under the International Monetary Fund’s program.

Pakistan exploring options

In recent years, Pakistan and the UAE have witnessed both economic cooperation and tensions. In 2018, the UAE provided $2 billion in aid, with additional assistance scheduled for 2023.

With rollover options now limited, Pakistan is considering options such as converting some of its debt into investments, although this is unlikely to provide immediate relief.

Impact of geopolitical tensions

The geopolitical situation is also influencing this crisis. Pakistan’s close ties with Iran have complicated its relations with the Gulf countries.

Pakistan’s economy is already vulnerable to external shocks due to structural weaknesses such as low exports, a high fiscal deficit, and limited revenue.