ISLAMABAD: Pakistan has requested the United Arab Emirates to extend its $2.5 billion loan by two years and reduce the interest rate by almost half, including a $450 million loan that was obtained 30 years ago for one year.
According to official sources, the request was made during the period when the UAE President was on a personal visit to Pakistan. After meeting the UAE President, Prime Minister Shehbaz Sharif had said that the UAE had agreed to rollover the loan, but no further details were provided.
The development comes as the World Bank also informed Pakistan on Thursday that the level of investment in the country is below the targets set under the $20 billion Country Partnership Framework (CPF). Pakistan has requested an extension of a total of $2.45 billion in outstanding loans from the UAE, State Bank, and federal government sources said.
One billion dollars matured on Friday, while another $1 billion is maturing next week. According to sources, there was no possibility of repayment as the UAE president had already agreed to the extension, but it is not clear whether the loan has been rolled over for one year or two years. Central bank sources said Pakistan has also requested a two-year extension and a reduction in interest rates by more than half.
Till the time of filing the news, no response was received from the State Bank of Pakistan and the Ministry of Finance. It is reported that Prime Minister Shehbaz Sharif informed the cabinet that a payment of $2 billion was due, which the UAE has shown willingness to extend.
The UAE had given Pakistan a one-year loan of $2 billion in 2018, which is part of the government’s $16 billion foreign exchange reserve.
