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• Pakistan’s problems further increase
• The UAE had given as much as 2 billion dollars in loans
• UAE took a strict stand and gave 30 days for repayment

Pakistan Economic Crisis: Pakistan’s problems are showing signs of increasing. The United Arab Emirates (UAE) loaned Pakistan $2 billion as the financial crisis hit Pakistan, which it has now agreed to repay next month at an interest rate of 6.5 percent. The UAE made two loans of $1 billion each, which matured on January 16 and 22. The loan was extended by one month to allow time for further negotiations on terms and interest rates. However, the UAE, taking a tough stand, has now given Pakistan only 30 days.

Pakistan is requesting a loan extension and says repayments will create a financing gap that will have to be filled from other sources. Also, Pakistan is currently beset by many crises. Recently, the IMF has also predicted negative economic growth. This has made other countries cautious in lending to other countries.

The UAE is said to have decided to take a tough line against Pakistan due to Pakistan’s support for Saudi Arabia in the dispute between Saudi Arabia and the United Arab Emirates over its support for groups in Yemen. It will be a challenge for Pakistan to suddenly have to pay back such a huge amount at once and that too in such a short time. Because, currently their financial situation is bad and it is difficult for them to raise such a huge amount in 30 days.

It will also be important to see how the UAE responds to Pakistan’s request to extend the loan repayment period. Under Pakistan’s $7 billion program with the International Monetary Fund (IMF), the UAE, Saudi Arabia and China have pledged a total of $12.5 billion in deposits with the State Bank of Pakistan till the end of the program in September next year. However, in the current dire situation, it is important to raise a large amount of money for Pakistan.