Pakistan requests UAE to rollover $2 billion loan

ISLAMABAD: Pakistan has requested the United Arab Emirates (UAE) to extend a $2 billion loan for another year, sources said on Tuesday.

The federal government has written to the UAE president, requesting a rollover of the loan that is due to mature this month, the sources said.

The UAE had deposited $3 billion with the State Bank of Pakistan (SBP) in 2022 to help the country cope with a balance of payments crisis.

Of the $3 billion loan, $1 billion will mature on January 17, 2024, and another $1 billion on January 23. The interest rates are 3 percent and 6.5 percent, respectively, for the two deposits, according to the sources.

The sources said the UAE was likely to agree to the rollover request in the coming days.

Pakistan’s foreign exchange reserves have improved in recent weeks, reaching $8.221 billion as of December 29. The SBP reserves have increased by over $1.3 billion in the last two weeks.

A rollover loan is a type of loan that is automatically renewed when it is not repaid in full within a predefined term. Instead of entering into default, the borrower transfers the outstanding balance into a new loan agreement, typically with a similar or modified set of terms and conditions.