Pakistan has brought in more than $10 billion in foreign loans and debt extensions so far this fiscal year, but uncertainty lingers over a key $2 billion rollover from the United Arab Emirates, adding pressure to the country’s external finances.
According to the latest data from the Ministry of Economic Affairs, Pakistan obtained $5.1 billion in new loans between July and January of the current fiscal year. Another $5 billion arrived through a mix of rolled-over debts and fresh funds from partners like Saudi Arabia, China, and the International Monetary Fund (IMF). This brings the total inflows to over $10 billion, though that figure sits about $1.4 billion below the same period last year. The drop stems largely from questions around the UAE’s $2 billion deposit rollover.
Support from allies has helped steady the ship. Saudi Arabia extended a $3 billion deposit via its development fund, China renewed a $1 billion cash placement, and the IMF disbursed a $1 billion tranche under its ongoing program. Multilateral institutions added $2.1 billion more, with notable contributions from the Asian Development Bank ($622 million), World Bank ($828 million), and Islamic Development Bank ($502 million), mostly tied to energy and development initiatives.
Commercial borrowing stayed modest. Standard Chartered Bank offered a $600 million facility at 6.3% interest, and Saudi Arabia provided a $705 million oil credit line at 6%.
Challenges Ahead
Pakistan still faces heavy repayments, with $12.5 billion in maturing cash deposits due this year. Foreign exchange reserves held by the State Bank of Pakistan stood at around $16.2 billion as of mid-February 2026, with total liquid reserves—including commercial banks—reaching $21.3 billion. Net reserves remain strained.
Attempts to tap international markets have hit roadblocks. Plans for Eurobonds, sovereign bonds, and Panda bonds have not moved forward.
The country’s total external debt is reported at $138 billion, with roughly 75% in concessional, long-term loans from friendly nations and multilateral bodies.
Observers point out that heavy dependence on rollovers and loans, combined with slow export growth, leaves the economy exposed if major partners hesitate. The UAE rollover, in particular, has drawn attention because of its short-term nature and past extensions.
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Recent reports indicate the UAE agreed to a two-month extension on the $2 billion until mid-April 2026 (around April 17), at 6.5% interest. This came after diplomatic efforts, including contacts by Deputy Prime Minister and Foreign Minister Ishaq Dar, ahead of Pakistan’s next IMF review. Earlier, the UAE had granted one-month rollovers in January and February. A longer-term deal remains under discussion, with one tranche of $1 billion due in July 2026.
The Ministry of Finance stresses that most debt is on favorable terms from bilateral and multilateral sources.
