The Abu Dhabi Fund for Development (ADFD) has rolled over a $2 billion deposit with the State Bank of Pakistan (SBP) that was payable over the next two months, Finance Minister Ishaq Dar confirmed on Wednesday.
In a late-night tweet, he stated, “Abu Dhabi Fund for Development (ADFD) has rolled over their deposit of $2 billion with State Bank of Pakistan, as discussed by [PM Shehbaz Sharif] with His Highness the President of UAE during last week’s official visit.
“Long live Pak-UAE friendship!”
The United Arab Emirates had agreed to roll over the existing loan of $2bn and give an additional loan of $1bn to Pakistan last week during Prime Minister Shehbaz’s visit to the country.
The UAE’s earlier loan of $2bn was scheduled to become due for repayment in February and March.
The announcement came as the SBP’s reserves dropped to a critical level of $4.34bn, the lowest since February 2014 and not even enough to finance less than a month of controlled imports.
Pakistan has been in the midst of a severe cash crisis as its reserves have rapidly declined in recent months, giving rise to fears of default. The completion of the ninth review of an International Monetary Fund (IMF) programme, that would release $1.18bn, has been delayed for months.
The rollover by the UAE now provides the authorities with an opportunity to revive the IMF programme over the coming days, gradually build back foreign exchange reserves, and put to end a tight control on imports that has crippled the manufacturing sector and created a shortage of essential items.