KARACHI: The United Arab Emirates has provided timely support by rolling over the $2 billion deposit placed with the State Bank of Pakistan (SB) for another year, as committed by its ruler a week before.

“The UAE has confir­med rollover of its two dep­osits of $1bn each placed with SBP for another one year, which were maturing in January 2025,” said a communiqué issued to the media by the SBP on Thursday.

On Jan 7, Prime Mini­ster Shehbaz Sharif told his cabinet that UAE Pre­sident Sheikh Mohammed bin Zayed Al Nahyan had agreed to roll over the $2bn debt this month.

On Dec 5, 2024, Saudi Arabia, for the third time, extended the $3bn deposit period by another year. Another $2bn Saudi cash deposit will be maturing by mid-June, and once again, a rollover would be needed.

SBP reserves up by $30m to $11.72bn

Pakistan requires $26.1bn to meet its external repayment obligations during FY25, which seems unlikely for the country to arrange this huge amount for debt servicing. There is no option but to seek debt rollovers for at least half of the total due during the year. Pakistan needs a $13bn debt rollover from China, Saudi Arabia and the UAE by June 30.

Financial experts believe the country would secure the debt rollover target and convince the International Monetary Fund to release the next tranche of $1bn in March.

SBP forex holdings rise

The foreign exchange reserves of the State Bank increased by $30 million to $11.725 billion during the week ended January 10, marking a return to an upward trend after a period of decline.

Since November 2024, the SBP reserves have dro­p­ped from over $12bn. Although the reason for the recent increase was not specified, bankers spec­ulate that the central bank has been purchasing dollars from the banking market.

The country’s total rese­rves also increased to $16.450bn, including $4.726bn held by the commercial banks during the week.

Published in Dawn, January 17th, 2025