ISLAMABAD: Saudi Arabia has extended an additional $3 billion in financial support to Pakistan, in addition to the $5 billion deposit it had promised on Friday, Federal Finance Minister Mohammad Aurangzeb announced in Washington. Speaking on the sidelines of the World Bank–IMF Spring Meetings 2026, he the fresh funds were expected to be disbursed within days and would help shore up the country’s foreign exchange reserves.
Aurangzeb said the support would help Pakistan meet its target of building reserves to around $18 billion, or roughly 3.3 months of import cover, in line with commitments under its programme with the IMF. The announcement has come days after Pakistan repaid a $1.4 billion Eurobond, which the minister described as a “non-event”, according to a Dawn report.
Pakistan ministers were sent into a tizzy and frenetic efforts to mobilise funds from Saudi Arabia, China and Qatar after UAE communicated that it wanted Pakistan to return $3.5 billion it owed. As is Pakistan’s habit, these funds have been subjected to repeated roll-overs during the past decade. Roll-overs usually mean that the principal amount is not returned to the lender and instead only interest is paid.
Taking Loans to Repay Interest
In Pakistan’s case, this is a dubious practice which it has repeatedly resorted to in most loans it has taken. Its economy is in such a precarious c0ndition that it now takes loans, from whoever is willing to lend it, for repaying interests on earlier loans. So that it doesn’t become a sovereign defaulter and it is only repeated IMF programs that have resurrected its economy.
Of the $3.5bn loan to be repaid to the UAE this month, Pakistan had announced part payment on April 11, then another tranche on April 18 and the entire amount by month-end. However, it has failed to pay the money it was to return on April 11. This was to be an amount of $450 million Pakistan had taken from the UAE 30 years ago promising to pay back within a year.
The UAE later gave it another $3 billion, once in 2018 and another time in 2023. The rollovers by the UAE were for one year initially but later it reduced the rollover periods to just a month each time, indicating thereby that it wanted its money back. However, Pakistan ignored the repeated hints forcing the UAE authorities to set a deadline of April 2026 for the return of all of its loan.
The finance minister also stated that Islamabad was advancing its broader external financing agenda, including the recently announced Global Medium-Term Note (GMTN) programme and the planned Panda Bond issue. This issue, which may likely be of $250 million initially, and go up to $1 billion, is being planned with the help of China. The Chinese currency yuan and Pakistani rupee will be the instruments for this and not US dollar.
Foreign Investments Withdrawn
“We are looking at Eurobond, we are looking at Islamic sukuk, we are looking at dollar-settled rupee-linked bonds,” Aurangzeb said. Aurangzeb said while the country had not yet requested any additions or changes to its $7 billion IMF programme, it is an option that can be considered.
The latest data from the State Bank showed that 90 per cent of foreign investment in domestic bonds had been withdrawn. According to this data, total outflows during nine months of current financial year (FY25-26, till June 30) were $794m (almost 90 per cent), leaving a meagre $93m invested.
The SBP data showed that $227m was withdrawn from T-bills in the first 27 days of March, compared to an inflow of $19m, indicating weak investor confidence.
The highest outflow of investment from the T-bills was $281m, which returned to the UK. Likewise, the outflows for the UAE were $209m; Bahrain $170m, Singapore $77.6m, and the US $32m.
Shameless Pakistani politicians
The impending repayment of $3.5 billion to UAE was framed by Islamabad as a matter of “national dignity’’ as if it will be any more dignified to take loan from a friend and forget about it. Senior ministers and officials in the Federal Finance Ministry of Pakistan said it was important to return the loan as it was a commitment the country must honour.
Senator Mushahid Hussain had, however, framed the return and repayment of the $3.5 billion to the UAE as a big favour and helping a younger brother in distress. He said Pakistan must help the UAE as it had to pay money to US President Donald Trump as he must be demanding it for carrying out the attack on Iran and the UAE being an ally of the US! In an interview to a local TV channel, the Senator, keeping a very straight face, said Pakistan was giving money to help the UAE which was in distress as Iran had rained missiles on it. The Senator did not indicate for a moment that it was a loan that was long overdue for return that would be repaid, if at all!
To the viewers, and the anchor of the programme, it seemed more like Pakistan was about to give money from its coffers to the UAE. He also cautioned UAE against purported Indian designs on it. Since 4.3 million (or 43 lakh) Indians live in the UAE, some day they could easily overwhelm the Emiratis and force them to be a part of “Akhand Bharat’’, Senator Mushahid Hussain said.
Mushahid said that as a “big brother’’, Pakistan would do well to help and support the “little brother’’ (UAE, its benefactor), and said so without batting any eyelid. It is difficult to fathom how such shameless, ungrateful attitude is displayed in public by a senior Pakistani politician, a very educated one at that. One can only say that such uncouth behaviour is nothing unusual in his playbook.
