UAE pressures Pakistan to repay $2 billion loan amid Middle East tensions
Islamabad : Pakistan is facing mounting financial pressure as the United Arab Emirates has reportedly asked Islamabad to repay a $2 billion loan within a stipulated deadline, even as the country attempts to position itself as a mediator in the ongoing tensions involving Iran, United States and Israel.
According to reports, the UAE has asked Pakistan to return the loan amount by April 17, while also imposing higher interest rates. This development comes at a time when Pakistan is actively engaging with countries like Egypt and Turkey in an effort to de-escalate the conflict in the Middle East and push for a ceasefire between Iran and its adversaries.
The loan in question dates back to 2018, when the UAE extended financial assistance of $2 billion to Pakistan to support its struggling economy. Over the years, the loan has been rolled over periodically. However, the latest demand signals a tightening of financial conditions for Islamabad.
Data from the State Bank of Pakistan indicates that the UAE had initially charged around $130 million annually as interest on the loan. Subsequently, the interest rate was reportedly increased from 3 percent to 6.5 percent, further adding to Pakistan’s repayment burden.
The demand for repayment has come in the backdrop of escalating hostilities in the Middle East. Following recent military actions involving the United States and Israel targeting Iran, the region has witnessed heightened instability. Iran, in response, has reportedly targeted American bases across the region and intensified its confrontation with Israel. Iran-backed groups such as Hezbollah and the Houthis have also become active participants in the conflict, raising fears of a broader regional war.
Amid these developments, Pakistan has been attempting to play a diplomatic role by facilitating talks and urging restraint among the involved parties. However, sources indicate that Pakistan’s mediation efforts have not yielded significant progress so far. In fact, Russia is now believed to have taken a more prominent role in brokering potential negotiations.
Russian President Vladimir Putin is said to be personally overseeing mediation efforts. Reports suggest that certain conditions, including reopening key maritime routes like the Strait of Hormuz, are being discussed as part of a possible ceasefire framework.
Meanwhile, the UAE had earlier agreed to roll over the $2 billion deposit for a short term of two months, with April 17 set as the final deadline. The increasing financial pressure, coupled with geopolitical challenges, has placed Pakistan in a difficult position as it navigates both economic and diplomatic fronts.
