UAE pledges $3 billion deposit for Pakistan
LONDON – The United Arab Emirates announced a deposit of $3 billion in the State Bank of Pakistan to support Islamabad’s financial and monetary policy and bolster its foreign reserves.
The Abu Dhabi Fund for Development was to deposit the money by the end of the year to enhance liquidity and monetary reserves of foreign currency at the bank, the Emirati state news agency WAM reported December 21.
“The Abu Dhabi Fund for Development has financed eight development projects in Pakistan with a total value of 1.5 billion UAE dirhams ($410 million), including 931 million dirhams ($253.6 million) in grants. The funds covered projects in sectors such as energy, health, education and roads,” the Abu Dhabi Fund for Development said in a statement.
Pakistani Prime Minister Imran Khan thanked the UAE government for “supporting Pakistan so generously in our testing times. This reflects our commitment and friendship that has remained steadfast over the years.”
The United Arab Emirates hopes to match assistance from Saudi Arabia, which agreed in October to park $3 billion directly with Pakistan “as a balance of payment support.” Riyadh pledged an additional loan worth up to $3 billion in deferred payments for oil imports. Islamabad has received two $1 billion tranches from Riyadh and the third instalment is expected in January.
The cash inflow improved Pakistan’s capacity to pay for imports and pay off external debt instalments in the current fiscal year.
News of the Emirati deposit came a month after a visit by Khan to the UAE during which he met with UAE Vice-President and Prime Minister Sheikh Mohammed bin Rashid al-Maktoum, who is also the ruler of Dubai, and Abu Dhabi Crown Prince Sheikh Mohammad bin Zayed al-Nahyan.
During the visit, the UAE agreed to chalk out a road map for cooperation with Pakistan in trade, investment, economic development, energy, infrastructure and agriculture.
Pakistan’s economic difficulties led the country to devalue its currency five times, slashing its value by more than one-quarter. Islamabad is in talks with the International Monetary Fund (IMF) to negotiate the country’s potential 13th bailout since the early 1980s.
Pakistani Finance Minister Asad Umar declared in November that the country’s economic crisis was over. He said: “Pakistan’s immediate balance of payment crisis is over” without mentioning talks with the IMF. A final deal worth about $6 billion is expected by mid-January, local media reports said.