UAE demands return of $1 billion loan to Pak, sends PM Khan into panic as deadline nears

Sending shockwaves across Pakistan, the United Arab Emirates (UAE) has demanded its USD 1 billion back from the debt-ridden economy led by PM Imran Khan. The middle-eastern country has set Friday as the deadline day for Pakistan to return the whopping USD 1 billion amount which it had loaned from UAE. According to reports, the amount had been deposited with the State Bank of Pakistan (SBP) and has now reached its maturity. 

As per several reports, top Pakistani officials have made repeated attempts to reach out to the Crown Prince, seeking an extension in time to return the loan. Islamabad has cited its debt-ridden economy and the impact of the COVID-19 pandemic as a reason behind the delay in the return of the loan amount. According to the World Bank estimate, amid the COVID pandemic, Pakistan’s real GDP growth is estimated to have declined from 1.9 per cent in FY19 to -1.5 per cent in FY20.

Pakistan's debt continues to rise

Last year, Pakistan had managed to pay back part of a loan secured from Saudi Arabia after its all-weather friend - China - had come to Imran Khan's rescue. With China's help, Pakistan paid back USD 1 billion out of the USD 3 billion loan it had secured back in 2019 to avoid default on international debt obligations. 

As per reports, Islamabad had sought Beijing's help to return USD 1 Billion to avoid any adverse impact of the partial withdrawal of the Saudi lifeline. In October 2018, Saudi Arabia had agreed to provide $6.2 billion worth of financial package to Pakistan for three years. 

According to the State Bank of Pakistan (SBP), the foreign debt and liabilities of Islamabad have increased by USD 3 billion till December 2020. Till December, external debt and liabilities totalled USD 115.7 billion compared to USD 112.7 billion till June end. As per reports, the Imran Khan-led government has received USD 6.7 billion in gross foreign loans itself in 2020-21, which includes a new loan from Beijing worth USD 500 million.