ISLAMABAD: The Foreign Office on Saturday firmly rejected misleading and unfounded reports concerning the return of debt owed to the United Arab Emirates saying the repayment constitutes a routine financial transaction under bilateral commercial agreements.

The clarification came after regional media highlighted Pakistan’s plan to repay two major external loans totalling 3.5 billion dollars this month.

According to official sources Islamabad will repay the UAE’s 2 billion dollar deposits along with 6 percent interest on April 17.

Additionally the country will settle 1.3 billion dollars upon maturity of a Eurobond on April 8.

These repayments include both principal and markup bringing the combined outflow to 3.5 billion dollars within days.

The Foreign Office emphasised that the UAE deposits were placed with the State Bank of Pakistan under mutually agreed commercial terms demonstrating Abu Dhabi’s strong support for Pakistan’s economic stability and prosperity.

Such arrangements have formed a cornerstone of bilateral financial cooperation since 2019 when the UAE extended critical balance of payments support.

Pakistan’s total external debt and liabilities stood at 138 billion dollars as of December 2025 according to State Bank of Pakistan data.

Of this the external public debt component is approximately 92 billion dollars with nearly 75 percent comprising concessional and long term financing from multilateral and bilateral partners.

The latest repayments therefore represent a manageable portion of the overall portfolio and align with the country’s debt sustainability framework.

Foreign exchange reserves have shown marked improvement reaching around 21.8 billion dollars in total liquid assets by late March including 16.38 billion dollars held by the State Bank.

This buffer provides adequate cover for the upcoming obligations without disrupting macroeconomic stability.

Remittances have also recorded robust growth hitting 26.5 billion dollars during July to February of fiscal year 2026 underscoring household confidence and external inflows.

The International Monetary Fund programme remains on track with staff level agreements unlocking fresh disbursements and requiring timely rollovers from friendly countries including the UAE.

Pakistan has consistently met its external financing needs under the extended fund facility while maintaining primary fiscal surpluses.

Economists note that shifting from annual to shorter term rollovers on UAE deposits reflects evolving commercial terms yet signals continued trust in Pakistan’s reform trajectory.

The 2 billion dollar deposit originally extended in 2019 has seen multiple extensions including a recent two month rollover until April 17 at the prevailing 6 percent interest rate.

In parallel Pakistan converted 1 billion dollars of UAE support into direct investment during high level visits further deepening economic linkages.

The Eurobond repayment addresses a commercial borrowing instrument issued earlier to diversify funding sources away from pure bilateral reliance.

Market analysts view the dual repayments as evidence of Pakistan’s improving credit profile amid contained current account deficits and steady export performance.

Inflation has moderated significantly while real GDP growth projections for fiscal year 2026 hover around 3.2 percent according to IMF assessments.

Such indicators reinforce the narrative of gradual economic recovery despite the high debt stock.

The Foreign Office statement explicitly dismissed speculation linking the repayment to regional geopolitical tensions insisting the move follows pre agreed maturity schedules.

Bilateral ties with the UAE remain robust encompassing trade investment and people to people contacts with over one million Pakistanis contributing to the Gulf economy.

Finance ministry officials have confirmed that the repayments will be executed smoothly through the State Bank without requiring emergency measures or new borrowings.

This approach aligns with broader debt management strategies aimed at lengthening maturities and reducing rollover risks over the medium term.

Looking ahead Pakistan anticipates additional support packages from multilateral institutions and development partners to meet gross financing needs estimated at 16 to 20 billion dollars annually.

The timely honouring of commitments to the UAE and international bondholders is expected to bolster investor sentiment and facilitate future market access.

Overall the episode underscores Pakistan’s commitment to fiscal discipline and transparent external debt handling at a time when global financial conditions remain volatile.

The developments have drawn coverage from both domestic and international outlets with regional reports providing initial details later authenticated by official clarifications.

As the repayments materialise observers will monitor their impact on reserve adequacy and the ongoing IMF review process slated for the coming weeks.

Pakistan’s economic team continues engagement with all stakeholders to ensure seamless transition and sustained macroeconomic stability.