KARACHI. The State Bank of Pakistan (SBP) said on Saturday that the government had paid $2 billion to the United Arab Emirates (UAE).

Earlier this month, a senior Pakistani official said Abu Dhabi had sought the immediate return of $3.5bn; the funds were part of external financing support extended in 2019 to help stabilise Pakistan’s balance of payments.

The government had already paid $500 million to the UAE. The remaining amount is expected to be paid on April 23. The outflow of $3.5bn dollars could be a big shock to the central bank’s foreign exchange reserves.

However, Saudi Arabia on Thursday pledged an additional $3bn in deposits for Pakistan and extended its existing $5bn facility for a further three years.

A day later, the SBP said it had received $2bn from Saudi Arabia.

As of April 10, the central bank’s foreign exchange reserves stood at $20.52bn.

Finance Minister Muhammad Aurangzeb said earlier this week that Pakistan was considering Eurobonds, loans from other countries and commercial debt to replace the loan from the UAE and manage its foreign reserves.

Aurangzeb, speaking on the sidelines of the IMF/World Bank annual spring meetings, said the country could manage all debt repayments, and that reserves remained at roughly 2.8 months of import cover. Maintaining at least that level, he said, would be “an important aspect of our overall macro stability as we go forward”.

“We are looking at Eurobond, we are looking at Islamic sukuk, we are looking at dollar-settled rupee-linked bonds,” Aurangzeb said, adding that the government expected to issue Eurobonds this year and are also exploring commercial loans.

Aurangzeb said while the country had not yet requested any additions or changes to its $7bn IMF lending programme due to the economic shocks of the war in the Middle East, it was a potential option.

Meanwhile, on Friday, the government announced it had raised $500 million in the international capital market through a Eurobond, marking the first such issuance in four years.

Last week, Adviser to the Finance Minister Khurram Schehzad also said that Pakistan had repaid $1.43bn in external debt, including a $1.3 billion Eurobond maturing on April 8.