Countdown to UAE $ 1 billion liquidity facility
The United Arab Emirates (UAE) has yet to indicate that it wants to withdraw $ 1 billion in cash assistance – maturing next week – from Pakistan.
The facility can be extended for one year.
In addition, Islamabad is expected to repay the remaining billion dollars in Riyadh which also falls due on the same day – Jan. 24 – sources from the finance ministry said.
The return of the third and final tranche of the $ 1 billion loan to the kingdom would mark the end of the $ 6.2 billion financial support program that Riyadh provided the country for three years in October 2018.
The kingdom had withdrawn the $ 3.2 billion deferred oil financing facility in May last year and the cash assistance between July and January 2020-2021. The initial deadline for repayment of the loan was 2022.
The United Arab Emirates had also announced an investment of $ 6 billion wrap for Pakistan. This included $ 3 billion in cash injection and an additional $ 3 billion in oil supply on deferred payments. He disbursed $ 2 billion in cash but withdrew the oil financing facility.
The sources said the UAE’s $ 1 billion loan matures on January 24, with an option that the facility can be extended for one year as part of the original deal. They said the Gulf country had yet to suggest that Pakistan withdraw the loan.
“In the event that he does not withdraw the facility, the loan would be considered extended for one year,” a senior finance ministry official told the Express Tribune on Friday.
The ministry has not officially commented on the matter. It was a “confidential bilateral matter,” the finance secretary said in a brief response.
The government feared that after Saudi Arabia decided to withdraw its bailout, the UAE would follow suit.
The sources said Pakistan had obtained three different loans from China pay off Saudi debt, including the last installment of $ 1 billion.
“Beijing has granted a soft loan of $ 1 billion and two separate lines of financing of $ 1.5 billion and $ 500 million to repay Saudi debt,” the sources told the Express Tribune.
After coming to power, Prime Minister Imran Khan twice visited Saudi Arabia to secure the package, which allowed the new PTI government to negotiate a deal with the IMF.
The government also failed to reinstate the IMF’s suspended $ 6 billion program. The PTI government is implementing two key conditions to introduce a mini-budget and increase electricity tariffs.
The gross foreign exchange reserves of the central bank, which amount to 13.4 billion dollars, remain fragile, because they are constituted largely by borrowings.
Short-term net loans from commercial banks stood at $ 4.6 billion at the end of November last year. Loans are double counted in commercial bank reserves and gross central bank reserves.