Pakistan, facing financial strain, is poised to receive a substantial USD 5 billion financial aid package from Saudi Arabia and Qatar, providing crucial support for its delicate external financial position. This assistance comes at a crucial time as Pakistan readies to repay a significant debt of USD 3.5 billion to the United Arab Emirates (UAE) this month, amidst mounting pressure on its foreign exchange reserves, as per a report by Dawn newspaper.
To alleviate the strain on Pakistan’s weak foreign reserves, Saudi Arabia and Qatar are stepping in to offer USD 5 billion in financial assistance, as reported by sources within the finance ministry. This development coincides with Finance Minister Muhammad Aurangzeb’s visit to Washington to participate in the IMF-World Bank Spring Meetings, aimed at advancing Pakistan’s economic diplomacy.
During the meetings scheduled from April 13 to 18, Aurangzeb is expected to engage with senior officials of the International Monetary Fund and the World Bank. These interactions are seen as part of a broader strategic outreach, with indications that traditional factors such as stringent program conditions or reliance on third-party guarantors, including the UAE, may carry less weight in the current scenario.
The IMF has mandated that Pakistan’s key bilateral creditors – Saudi Arabia, China, and the UAE – maintain their cash deposits with the country until the conclusion of the ongoing three-year program. The report suggests that the UAE might be replaced by Qatar in this arrangement.
Prior to his trip, Aurangzeb held discussions with Saudi finance minister Mohammed bin Abdullah Al-Jadaan in Islamabad, who also met with Prime Minister Shehbaz Sharif, underscoring the continued support during Pakistan’s efforts to settle its UAE debt. Saudi Arabia has been a significant source of concessional financing for Pakistan, with deposits totaling USD 5 billion rolled over to date.
Pakistan has committed to repaying the USD 3.5 billion debt to the UAE by the end of April, a liability that has been extended since 2018. The financial landscape is evolving, with strategic partnerships and financial assistance playing a pivotal role in Pakistan’s economic stability.