UAE extends USD two billion debt for Pakistan at 6.5% interest for one month

WEB DESK: In a move that provides immediate relief for Pakistan’s foreign exchange reserves, the United Arab Emirates (UAE) has rolled over two-billion dollars in maturing loans for one month at the existing interest rate of 6.5 percent, government and central bank sources confirmed on February 3, 2026.

According to Express Tribune, the rollover covers two separate one billion dollars deposits that matured on January 16 and January 22, 2026. The short extension gives Pakistan additional time to negotiate more favorable terms, including a potential two-year rollover and a reduced interest rate of around three percent.

Officials familiar with the discussions said the UAE agreed to this interim one-month bridge to facilitate ongoing talks on the duration and pricing of the debt. The move comes as Pakistan continues to rely on friendly nations for external financing support to manage balance-of-payments pressures and stabilize reserves.

The development is viewed as a positive short-term step, preventing any immediate outflow that could strain reserves while Pakistan works to meet International Monetary Fund (IMF) program targets and attract long-term investment.

Prime Minister Shehbaz Sharif has expressed gratitude to Gulf partners for their support during economic challenges, while noting that such arrangements also test national self-reliance.

As negotiations continue for a longer-term deal with better terms, this rollover underscores the importance of Pakistan’s strategic ties with the UAE and other allies in safeguarding economic stability. For ordinary Pakistanis, this means no immediate pressure on the rupee or imports in the coming weeks, while highlighting the ongoing need for sustainable reforms to reduce dependence on short-term debt rollovers.

Breakdown of the USD two-billion Rollover

The rollover involves a total of USD two-billion, divided into two tranches of USD one-billion each, with a one-month extension that pushes the maturity into February 2026. The interest rate remains unchanged at 6.5%. These loans were originally placed with the State Bank of Pakistan (SBP) in previous years, and Pakistan has historically relied on annual or short-term rollovers from allied countries, including the UAE, Saudi Arabia, China, and Qatar, to meet its external financial obligations.