UAE not demanding return of $2bn loan, says State Bank governor

ISLAMABAD (Dunya News) – Jameel Ahmad, Governor of the State Bank of Pakistan, has said that the United Arab Emirates is not seeking immediate repayment of its $2 billion loan to Pakistan, adding that the facility is now being rolled over on a monthly basis instead of annually.

Briefing the National Assembly Standing Committee on Finance, the governor noted that previously the loan was extended on a yearly rollover basis, but the arrangement has now shifted to monthly renewals. He added that external debt sourcing, which had earlier reached $4 billion, has since declined.

Ahmad acknowledged that the country’s exports are currently under pressure but maintained that macroeconomic indicators have improved. He projected inflation to remain between five and seven per cent this year.

He highlighted that the current account deficit, which stood at $17.5 billion in 2022 — equivalent to 4.7 per cent of GDP — was reduced to one per cent of GDP in 2023. Last year, Pakistan recorded a $2 billion surplus, marking the first current account surplus in 14 years.

The governor said foreign exchange reserves, which had fallen to $2.8 billion — barely enough for two weeks of imports — have now risen to over $16 billion. The central bank aims to increase reserves to $18 billion by June 2026 and to $20 billion by December 2026.

He further noted that Pakistan’s external debt rose from $55 billion to $103 billion over seven years but has since been stabilised. The country’s total external debt currently stands at $148 billion, of which approximately $103 billion is government debt.