Pakistan has formally approached the United Arab Emirates (UAE) seeking a $2 billion loan rollover, as disclosed by sources within the Ministry of Finance. In a noteworthy move, Prime Minister Anwaar-ul-Haq Kakar personally communicated this request through a letter addressed to the President of the UAE.
The Rollover Prospects for $2 Billion Loan
The UAE had previously deposited $3 billion in safe deposits with the State Bank of Pakistan (SBP). As of now, $1 billion is slated to mature on January 17, 2024, with an additional $1 billion set to mature on January 23. Of significant financial importance, Pakistan is currently paying a 3 percent interest rate on one portion of the deposit, while the other $1 billion bears interest at a rate of 6.5 percent. According to informed sources, the negotiation’s focal point revolves around the possible rollover of the entire $2 billion, a move that seems plausible in the near future.
Implications on Foreign Exchange Reserves
Notably, the liquid foreign exchange reserves held by the State Bank of Pakistan have experienced a recent surge. As of December 29, the foreign currency reserves stood at $8.221 billion, marking an increase of over $1.3 billion in the past two weeks. The positive trend may contribute to Pakistan’s negotiation stance, potentially influencing the terms and conditions of the loan rollover.
Read more: SBP Governor Foresees a Dip in Inflation in the Coming Months
