UAE Throws $1 Billion Lifeline to Pakistan as Economic Woes Deepen
The United Arab Emirates has granted Pakistan a $1 billion loan, a much-needed infusion for an economy ravaged by natural disasters and soaring inflation, according to the office of Pakistani Prime Minister Shahbaz Sharif. The UAE also agreed to roll over an existing $2 billion debt that had come due.
This lifeline comes as Pakistan grapples with an economic crisis triggered by catastrophic flooding that led to more than 1,700 deaths, obliterated two million homes, and inflicted $30 billion in damages. The country’s woes have been further compounded by skyrocketing food and fuel costs due to global shortages, a ripple effect of Russia’s war with Ukraine.
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With foreign currency reserves plunging to a mere $5.5 billion, enough to cover only a month of imports, Pakistan has turned to its trading partners and allies, including the UAE, Saudi Arabia, and China for financial assistance. Negotiations for the next installment from a loan program with the International Monetary Fund, initiated in 2019, are ongoing.
China, Pakistan’s primary financial ally, has loaned the country $30 billion, which makes up approximately a third of Pakistan’s national debt.
