Pakistan has confirmed the return of $2 billion in deposits to the United Arab Emirates (UAE), but has denied any external pressure, calling it a normal financial process. However, reports are claiming that this payment is being made after the demand of Abu Dhabi, which has raised new questions on the economic condition of Pakistan.
Pakistan’s Foreign Ministry said in a statement issued on April 4 that the amount was deposited in the State Bank of Pakistan and was kept under bilateral commercial agreements. The ministry said, “These deposits were given to support the economic stability of Pakistan. They are now being returned as per the stipulated terms. It is misleading to present this in any other way.”
However, reports quoting government and financial sources suggest that the UAE had demanded immediate return of this amount amid recent regional tensions. Earlier this deposit was rolled over every year, but in recent months its period was reduced to one month and then to two months. According to sources, Pakistan will return this $2 billion to Abu Dhabi by the end of April. Pakistan was paying about 6 percent interest on this deposit amount.
This development has come at a time when Pakistan has to rely heavily on external financial assistance to handle its economy. The country’s foreign exchange reserves are currently said to be more than $21 billion, but it needs external deposit rollover of about $12 billion in the current financial year.
This includes $5 billion from Saudi Arabia, $4 billion from China and $3 billion from the United Arab Emirates. In such a situation, this process of payment to UAE can further complicate Pakistan’s financial planning, especially if other partner countries also make similar demands.
Experts believe that the increasing geopolitical tension in West Asia has influenced this decision. In such a situation, investors and allied countries try to reduce their financial risks, which can increase pressure on countries like Pakistan.
Amid these apprehensions, Pakistan described its relations with the UAE as strong, saying that the partnership between the two countries is based on “trust, cooperation and shared economic interests”. The Ministry of External Affairs also underlined that the two countries have long had close cooperation in many areas, including trade, investment and defence.
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