IMF Raises Concern Over Delay in UAE Deposit Rollover for Pakistan

The International Monetary Fund (IMF) has expressed concern over Pakistan’s inability to secure a one-year rollover of $2 billion in deposits from the United Arab Emirates, although the State Bank of Pakistan (SBP) has assured the visiting IMF delegation that short-term arrangements are in place and negotiations for a longer-term rollover are ongoing.

Finance Minister Muhammad Aurangzeb told journalists after a meeting of the National Assembly’s Standing Committee on Finance that there was no issue regarding the rollover, questioning why the media was portraying it as a problem.

Sources said the IMF may also seek a fresh assurance by meeting the UAE ambassador regarding the extension of the deposits.

The IMF review mission arrived in Karachi and Islamabad on Wednesday. During discussions with senior SBP officials, a member of the mission expressed concern over the failure to secure a full-year rollover from the UAE.

Meanwhile, Deputy Prime Minister and Foreign Minister Ishaq Dar said the UAE had not withdrawn its deposits and that talks were underway for a longer-term extension. However, a senior government official, speaking on condition of anonymity, described the situation as worrying, noting that Pakistan has yet to receive written confirmation from the UAE. The government had initially secured only a two-month temporary rollover and is now negotiating new terms. The evolving situation will need to be clearly reflected in the ongoing IMF review.

In technical-level talks between the IMF mission and SBP officials, discussions covered foreign exchange reserves, monetary policy, exchange rate management, counter-terrorism financing, anti-money laundering measures, and banking regulations.

During an introductory session, the SBP governor and management informed the IMF that Pakistan recorded a current account surplus of $121 million in January, compared to a deficit of $393 million in the same month last year.

However, for the first seven months of the current fiscal year, the current account posted a deficit of $1.74 billion, compared to a surplus of $564 million in the corresponding period last year, indicating mounting external payment pressures.

Officials further briefed the IMF that a total of $3 billion in UAE deposits are currently held with the SBP. Of these, two $1 billion deposits matured on January 17 and 23 and were initially rolled over for one month, with their extensions expiring on February 16 and 23. They have now been temporarily extended until April 16 and 23. The repayment of the third tranche is also approaching its due date. Pakistan may have to pay interest of over 6.5 percent on these deposits.