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Pakistan Likely to Get One-Year Extension on $2 Billion UAE Loan

Islamabad – Acting Prime Minister Anwaar-ul-Haq Kakar is expected to request a rollover of Pakistan’s $2 billion loan repayment to the United Arab Emirates (UAE) due this month. Sources say the UAE is likely to approve a one-year extension.

This comes after the UAE granted a similar extension last January when former PM Shehbaz Sharif made a similar request. The UAE had initially deposited $3 billion in Pakistan’s central bank, of which $2 billion remains to be paid.

According to the Finance Ministry, negotiations are underway and an agreement could be finalized this week based on the positive precedent. The extension would provide much-needed breathing room to Pakistan’s dwindling foreign reserves.

As of January 5, the State Bank of Pakistan’s reserves stood at $8.15 billion, down slightly from $8.22 billion on December 29 but still up by over $1 billion in recent weeks.

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Economic experts say Pakistan’s improving financial stability strengthens its position in negotiating debt relief from allies like the UAE. The outcome will impact its immediate repayment obligations and long-term economic ties with Gulf countries.

With Pakistan in the midst of an economic crisis, the loan rollover is critical to easing immediate external account pressures. However, analysts stress the need for Islamabad to undertake structural reforms for lasting macroeconomic stability.

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