UAE to lend $1bln, roll over further $2bln to Islamabad

The United Arab Emirates agreed on Thursday to lend an amount of $1 billion to Pakistan and roll over an existing $2 billion loan to provide a cushion to country’s dwindling foreign exchange reserves.

The loan announcements came during Pakistan's prime minister, Shehbaz Sharif’s two-day visit to the United Arab Emirates. He met UAE President Sheikh Mohammed bin Zayed al-Nahyan apart from meetings with other officials and business leaders to discuss business and economic opportunities.

Shehbaz Sharif in a tweet said: "We share a resolve and understanding that the continuous efforts need to be made to further strengthen trade, investment and economic relations.”

As a ninth review by International Monetary Fund (IMF) to clear the release of the next $1.1 billion tranche of funds to Pakistan has been pending since September, the external financing is crucial for the country's broken economy.

Pakistan's central bank foreign reserves fell to a critical level of $5.5 billion in the week ending Dec. 30, barely enough for three weeks of imports.

The IMF and Pakistan signed a $6 billion bailout in 2019 that was topped up with another $1 billion earlier this year.

Pakistan’s long-time ally Saudi Arabia has also indicated to invest $10 billion in the South Asian nation and increasing its deposits in the country's central bank from $3 billion to $5 billion.