ISLAMABAD — The United Arab Emirates has rolled over $2 billion of Pakistan’s debt for one month at an interest rate of 6.5%, easing immediate pressure on the country’s foreign exchange reserves while negotiations continue on a longer-term arrangement, according to The Express Tribune.

The rollover applies to two $1 billion loans that matured on January 16 and January 22. Officials said the short extension was agreed to provide additional time for discussions on the maturity period and interest rate, as Pakistan seeks a two-year rollover at a rate close to 3%.

Government officials cited in the report said a fresh request for rollover is being prepared, warning that repayment of the amount would create a financing gap that would need to be bridged through alternative sources.

The development comes under Pakistan’s $7 billion programme with the International Monetary Fund, under which the UAE, Saudi Arabia and China have committed to maintaining a combined $12.5 billion in deposits with the State Bank of Pakistan until the programme ends in September next year.

Officials noted that this is the first time the UAE has granted only a one-month rollover, marking a departure from earlier annual extensions. They said clarity on the final maturity period and interest rate is expected in the coming days.

In December, SBP Governor Jameel Ahmad formally requested the UAE to roll over $2.5 billion for two years and reduce the interest rate by nearly half. Prime Minister Shehbaz Sharif later raised the issue with the UAE leadership, stating that a rollover had been agreed, without disclosing specific terms.

The UAE initially extended $2 billion to Pakistan in 2018 for one year. Pakistan has since relied on repeated rollovers after being unable to repay the principal. An additional $1 billion loan was provided in 2023 to help meet external financing needs linked to the IMF programme.