ISLAMABAD: In a significant move to support national economic stability, the All Pakistan Textile Mills Association (APTMA) has initiated deliberations on depositing 2 billion dollars in the State Bank of Pakistan following the impending repayment to the United Arab Emirates.
Industry leaders have stepped forward with a concrete alternative solution just as Pakistan arranges to return matured deposits totaling around 3.5 billion dollars to the UAE by the end of April 2026.
APTMA Chairman Kamran Arshad stated that the textile sector stands shoulder to shoulder with the government and will ensure no problems arise during this critical financial transition.
He emphasized that after peace negotiations the industry will meet the prime minister to devise a lasting resolution while prioritizing Pakistan first.
Arshad reiterated that APTMA has always fulfilled its commitments and will continue to do so in the national interest.
The development comes at a time when Pakistan’s foreign exchange reserves stand at approximately 16.4 billion dollars after recent external debt servicing including a 1.3 billion dollar Eurobond repayment.
International media including Bloomberg and Reuters have reported the UAE repayment demand linked to matured bilateral commercial deposits placed under agreements demonstrating strong Gulf support for Pakistan’s economy.
These deposits carried an interest rate of around 6 percent and had been rolled over multiple times since 2018 with recent short-term monthly extensions.
Geo News reported that the UAE requested immediate return prompting Pakistan to schedule tranches with 450 million dollars due on April 11, 2 billion dollars on April 17 and 1 billion dollars on April 23.
The repayment is expected to strain reserves temporarily though officials maintain arrangements are in place for smooth execution without breaching key International Monetary Fund targets.
Pakistan’s textile sector which contributes over 60 percent of total exports and employs millions has faced severe challenges with APTMA reporting 144 mills closed due to high energy costs heavy taxation and declining production.
Textile exports in the first half of fiscal year 2025 showed mixed trends with some segments recording up to 10 percent growth in value while upstream units like spinning suffered from 40 percent production decline.
Energy tariffs remain a major pain point with industry demanding reduction to 9 cents per kilowatt-hour or around 25 rupees per unit against current higher rates that have led to 19 percent drop in power consumption in certain months.
APTMA has consistently highlighted that competitive energy pricing is essential to safeguard jobs boost exports and prevent further de-industrialization against regional competitors like Bangladesh and Vietnam.
The proposed 2 billion dollar fund by textile industrialists could provide immediate liquidity buffer to the State Bank helping manage the outflow while preserving investor confidence.
This offer reflects the sector’s willingness to share the burden during external payment pressures that have intensified amid Middle East geopolitical tensions.
Government sources indicate ongoing discussions to shift from short-term loans to long-term investments with potential UAE funds returning in energy and infrastructure projects.
Such a transition could stabilize reserves in the long run and support broader economic recovery under the IMF programme.
Analysts note that timely industry support like APTMA’s proposal may ease short-term forex volatility and signal strong public-private partnership in managing external obligations.
Pakistan has arranged for 4.8 billion dollars in total external repayments by June 2026 underscoring the need for diversified funding sources and export-led growth.
The textile industry’s proactive stance comes amid calls for single-digit interest rates and resolution of port clearance delays that have increased from two days to ten days causing millions in demurrage charges.
With GSP Plus status vital for European market access preservation of textile competitiveness remains central to foreign exchange earnings.
APTMA’s assurance of full support during this period underscores the sector’s strategic importance as Pakistan navigates complex global financial dynamics.
Further meetings with the prime minister are anticipated to formalize the fund mechanism and explore additional relief measures for the beleaguered industry.
This initiative not only addresses immediate repayment concerns but also aims to strengthen overall economic resilience against future external shocks.