Pakistan announced on Thursday that the United Arab Emirates has reinvested its $2 billion deposits, providing critical support to the country’s cash-strapped foreign exchange reserves that are drying up.
The confirmation came days after Prime Minister Shehbaz Sharif visited the oil-rich Gulf country seeking help to improve the balance of payments.
Finance Minister Ishaq Dar confirmed on social media that the Dhabi Development Fund (ADFD) had deposited $2 billion with the State Bank of Pakistan (SBP).
“The Abu Dhabi Fund for Development (ADFD) has transferred its $2 billion deposit in the State Bank of Pakistan, as Prime Minister Shehbaz Sharif discussed with His Highness the President of the United Arab Emirates during the official visit. from last week. Long live the Pak-UAE friendship!” he tweeted Wednesday night.
The United Arab Emirates announced last week that it would provide a $3 billion lifeline to Pakistan in the form of a $2 billion rollover of existing debt and another $1 billion in new financing.
Pakistan has been hovering on the brink of default with only around $4 billion in reserves as it faces the daunting task of paying $13 billion in debt payments in six months.
In addition to the United Arab Emirates, Saudi Arabia also provided $5 billion in support in critical times to Pakistan. But it is not enough to cover the deficit unless the country wins the support of the International Monetary Fund (IMF).
The fund revived a stalled $6 billion loan program last August but has refused to release more funds unless Islamabad meets its tough conditions.
Meanwhile, the World Bank said Thursday that multiple media reports suggesting the lender had delayed approval of two $1.1 billion worth of loans until the next fiscal year were “unfounded.”
The Washington-based lender’s country director for Pakistan, Najy Benhassine, said: “Press reports referring to a World Bank decision to delay approval of potential banking operations in Pakistan are unfounded.” Behassine clarified that all the dates for loan approval were already scheduled.
For the current fiscal year, the government expected to receive between $30 and $32 billion in foreign funding, but the plans appear unrealistic. The financing plan included US$2.9 billion in loans from the World Bank.
With current foreign exchange reserves at just $4.3 billion, Pakistan may not be able to make it to June without the support of foreign creditors.
