Islamabad (Commerce Desk): The United Arab Emirates has rolled over Pakistan’s maturing loan of USD 2 billion for one month at the existing interest rate of 6.5 percent. This amount is part of Pakistan’s total foreign exchange reserves of USD 16 billion, on which the country pays approximately USD 130 million annually in interest.
According to sources, this is the first time the UAE has rolled over the loan for just one month, as previously the tenure was usually extended for up to one year. It is reported that two separate loans of USD 1 billion each were rolled over for one month. One loan was due to mature on January 16, while the other was set to mature on January 22.
Sources from the federal government and the State Bank of Pakistan stated that a temporary one-month extension has been granted to allow further negotiations on the loan tenure and interest rate. In December, the Governor of the State Bank requested the UAE to roll over the loan for two years at a lower interest rate, citing improvements in Pakistan’s credit rating and a decline in global interest rates.
Later, Prime Minister Shehbaz Sharif also requested the President of the United Arab Emirates to extend the loan repayment period. Sources added that Pakistan remains hopeful of reaching an agreement with the UAE on more favorable terms to ease pressure on foreign exchange reserves.
