FO rejects ‘misleading, unfounded’ commentary regarding financial deposits from UAE

The Foreign Office (FO) on Saturday rejected “misleading and unfounded commentary” regarding financial deposits from the United Arab Emirates (UAE), saying this was a “routine transaction”.

A senior Pakistani official had said on Friday that the country had decided to return $3.5 billion in debt to the UAE before the end of this month. According to the official, Abu Dhabi had sought the immediate return of the amount. These funds were part of external financing support extended by the UAE in 2019 to help stabilise Pakistan’s balance of payments.

In a statement, FO Spokesperson Tahir Andrabi said, “The deposits were placed under bilateral commercial agreements, demonstrating the UAE’s strong support for Pakistan’s economic stability and prosperity.”

He said that pursuant to mutually agreed terms, the government, through the State Bank of Pakistan (SBP), was now returning the matured deposits to the UAE.

“This is a routine financial transaction, and any attempt to portray it otherwise is erroneous and misleading,” he said.

“Pakistan and the UAE share a longstanding, fraternal partnership built on trust and strategic cooperation across trade, investment, defence, and people-to-people ties,” he said, adding that this relationship had stood the test of time and grown stronger with each passing year.

“The people of Pakistan warmly cherish the pivotal role played by His Highness, the late Sheikh Zayed bin Sultan Al Nahyan, in forging this enduring friendship, as well as his special affection for Pakistan,” he said.

“Pakistan remains fully committed to further strengthening this enduring relationship for a shared, prosperous future,” he said.

The senior Pakistani official said on Friday that the dec­i­sion to return the debt had ended the uncertainty surrounding the deposits placed through the Abu Dhabi Fund for Development, which were rolled over multiple times since 2019. In recent months, the extensions had become as short as a month long, reflecting Emirati unease over the continuation of the arrangement.

Under its ongoing International Monetary Fund (IMF) programme, Pakistan is required to secure around $12.5 billion in rollovers from three key partners — China, Saudi Arabia and the UAE — to maintain reserve levels and meet external financing needs. The UAE deposits are, therefore, a critical part of this arrangement.

The latest available data shows Pakistan’s central bank reserves at about $16.3 billion. A repayment of $3 billion would reduce these holdings sharply by 18 per cent, significantly lowering the external buffer and import cover.

The Ministry of Finance on Friday, through a post on X, said it was “continuously monitoring and managing Pakistan’s external flows in order to ensure stable foreign exchange reserves”.

“The government of Pakistan remains committed to fulfilling all its external obligations,” it added.