New Delhi, Apr 4: Already on the verge of bankruptcy, Pakistan is likely to face further financial problems as it is being compelled by the United Arab Emirates (UAE) to return the debt of $3.5 billion immediately.
The UAE, which has been going easy on the debt issue for decades, hardened its stance reportedly due to its anger against Pakistan for supporting Iran which has caused a lot of damage to the UAE by carrying out repeated attacks during the ongoing war.
The Iranian attacks have caused immense losses to the UAE as several of its oil facilities and other crucial infrastructure have been damaged.
Pakistan had received the amounts of loans from the UAE way back from 1996-97 and instead of clearing the debt, Islamabad repeatedly requested for rollover which happened multiple times.
But, now the UAE has decided to end the rollover mechanism and insisted that the debt be cleared.
Under pressure, Pakistan has decided to repay $3.5 billion to the UAE within this month, marking a shift away from long-standing rollover arrangements, according to the ‘Dawn’ newspaper of Pakistan.
The UAE had originally given these funds to Pakistan to support its balance of payments and had been rolled over regularly.
For the current fiscal year, Pakistan required a rollover of about USD 12 billion in external deposits, including USD 5 billion from Saudi Arabia, USD 4 billion from China and USD 3 billion from the UAE.
Pakistan currently holds more than USD 21 billion in reserves and will proceed with the repayment, though it may require external financing in the coming months.
Due to the serious economic condition, Pakistan depends heavily on finances from “friendly” countries such as Saudi Arabia, the UAE and China which have been providing crucial support to the economy by maintaining financial deposits.
The outgo of such an amount of money is going to hurt Pakistan badly, adding woes to its ongoing economic crisis which has caused immense hardships to the common people.
The economic situation has worsened after the West Asia war began as it caused acute shortages of fuel and energy.
The Pakistan government had even to resort to partial shut down of the country because of the severity of the situation. (NVI)
