Pakistan says repaid $3.45 bn UAE deposits as Saudi lifeline replenishes its reserves

Pakistan has repaid $3.45 billion in deposits to the UAE while securing fresh financial support from Saudi Arabia, according to official statements from the State Bank of Pakistan, in a move aimed at maintaining stability in its foreign exchange reserves.

The State Bank of Pakistan (SBP) on April 24 confirmed it had repaid the final $1 billion tranche to the Abu Dhabi Fund for Development, following an earlier repayment of $2.45 billion last week. The move completes the return of all UAE-linked deposits, funds that had previously propped up Pakistan’s reserves during periods of acute external stress.

But the outflow comes almost in tandem with fresh inflows. Just days earlier, the SBP disclosed receiving $3 billion from Saudi Arabia in two tranches—$2 billion on April 15 and another $1 billion on April 20, under a renewed deposit arrangement with Riyadh.

The timing is critical. As of April 17, Pakistan’s liquid foreign exchange reserves stood at $20.63 billion, according to central bank data. The near-simultaneous repayment and replenishment highlight Islamabad’s continued dependence on friendly nations to manage short-term external liabilities while avoiding a sharp drawdown in reserves.

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This choreography of inflows and outflows is not new, but it remains central to Pakistan’s macro survival strategy. Gulf deposits, primarily from Saudi Arabia and the UAE, are typically rolled over or refinanced, helping Pakistan meet IMF benchmarks and maintain a minimum reserve cushion equivalent to a few months of imports.

However, the full repayment to the UAE may signal a shift in bilateral financial arrangements or a recalibration of liabilities ahead of future negotiations with lenders. Analysts say such repayments, while positive for reducing short-term obligations, also expose the fragility of Pakistan’s reserve position if not matched by sustainable inflows like exports, remittances, or long-term investments.

For now, Saudi Arabia has stepped in once again as the lender of last resort. But the broader question remains: how long can Pakistan rely on deposit-driven stability rather than structural reforms? The answer will likely determine whether these reserve numbers reflect resilience or just another temporary reprieve.