THE United Arab Emirates has agreed to roll over US$2 billion (RM8.7 billion) owed by Pakistan and provide the country with an extra loan of US$1 billion, Islamabad said today.

The agreement comes as Pakistan grapples with a major foreign exchange crisis, holding enough reserves to pay for just three weeks of imports.

Pakistani Prime Minister Shehbaz Sharif arrived in the UAE earlier today for talks with top Gulf officials to seek help for the battered economy.

“The UAE president agreed to roll over the existing loan of US$2 billion and provide a US$1 billion additional loan,” a statement from Sharif’s office said.

“Both sides agreed to deepen the investment cooperation, stimulate partnerships and enable investment integration opportunities between the two countries.”

The statement did not provide the terms of the loan agreement.

Pakistan’s national debt stands at US$274 billion, or nearly 90% of GDP.

The nation’s foreign exchange reserves have dwindled to less than US$6 billion, with obligations of more than US$8 billion due in the first quarter alone.

A US$7 billion loan agreement with the IMF – about half of which has already been disbursed – has stalled because Pakistan has not fully implemented tough economic measures, including slashing subsidies and raising taxes.

The economy has also been hammered by devastating monsoon floods that left almost a third of the country under water last year, and the government says it needs more than US$16 billion over the next three years to rebuild.

Islamabad won some relief earlier this week when nations pledged more than US$9 billion to help with recovery efforts. – AFP, January 12, 2023.