Islamabad: Pakistan has decided to return a loan amounting to USD 2 billion to the United Arab Emirates after a request from Abu Dhabi, according to a media report released on Friday.

The funds were initially provided by the UAE to help Pakistan manage its balance of payments. Until recently, the amount had been regularly rolled over to ease financial pressure.

Sources indicated that the UAE has now sought the immediate repayment of the deposit in light of the evolving situation in the Middle East, particularly following the conflict involving the United States, Israel, and Iran.

Funds held by State Bank of Pakistan

According to a report by Geo News, the deposit had been maintained with the State Bank of Pakistan as a form of secure holding.

Officials familiar with the matter stated that Pakistan is expected to return the full USD 2 billion to Abu Dhabi before the end of the current month.

Interest payments and previous extensions

Sources revealed that Pakistan has been paying interest of around 6 percent on the deposit. In previous years, the UAE had routinely extended the loan on an annual basis.

However, in December 2025, the extension was granted for a shorter duration. The deposit was first rolled over for one month and later extended by an additional two months, with the current term set to end on April 17.

External financing pressures remain

For the ongoing financial year, Pakistan required a rollover of approximately USD 12 billion in external deposits. This included USD 5 billion from Saudi Arabia, USD 4 billion from China, and USD 3 billion from the UAE.

While Pakistan currently holds foreign exchange reserves exceeding USD 21 billion and is in a position to repay the UAE, it may still face the need to secure additional external financing in the months ahead.