Pakistan Repays $3.45bn in UAE Bank Deposits as Debt Cycle Concludes

Pakistan has completed the settlement of $3.45 billion in deposits held by United Arab Emirates banks, concluding the debt cycle with a final $1 billion repayment this week. The State Bank of Pakistan (SBP) confirmed the transaction, which involved the return of funds to UAE-based commercial lenders rather than the UAE central government. Debt repayment details The $3.45 billion total was repaid in several phases. Commercial banks in the UAE had placed these deposits with the SBP to bolster Pakistan’s foreign exchange reserves during periods of severe liquidity shortages. The final $1 billion installment follows a series of previous settlements aimed at reducing the country’s high-interest external debt obligations. Financial analysts in Karachi report that the repayment was managed through the country's current account inflows and recent bridge financing arrangements. Impact on foreign reserves While the repayment outflows initially put pressure on Pakistan’s gross foreign exchange reserves, the SBP indicated that the settlement was planned and accounted for in the current fiscal year's debt servicing schedule. The UAE remains one of Pakistan's most significant financial…