UAE’s Surprise $3 Billion Loan Move Puts Pakistan Under Strain
Pakistan managed to stabilize its economy in recent years with the help of loans from the IMF and friendly donors like the UAE.
Photographer: Arif Ali/AFP/Getty Images
Pakistan’s economy, already under strain from soaring oil prices, is facing a new setback after it failed to reach agreement with the United Arab Emirates to roll over $3 billion in debt for the first time in seven years.
The loan amounts to about 18% of Pakistan’s foreign exchange reserves, putting significant pressure on the country’s external buffers and threatening the currency at a time when high crude prices are draining its coffers. Pakistan’s reserves stood at $16.4 billion as of March 27, enough to cover three months of imports.