The Abu Dhabi Fund for Development (ADFD) increased its $2 billion deposit with the State Bank of Pakistan (SBP) on January 19.

During his recent visit to Pakistan, Prime Minister Shehbaz Sharif discussed the rollover with UAE President Sheikh Mohammed bin Zayed al-Nahyan, according to Pakistan’s Finance Minister Ishaq Dar.

According to Geo News, the president of the UAE offered to extend a $1 billion loan in addition to the existing $2 billion credit. Pakistan, which is still recuperating from devastating nationwide floods that have caused more than $30 billion in damage, was comforted by the UAE’s financial aid.

The SBP has foreign exchange reserves of $4.5 billion, equivalent to three weeks’ worth of import bills at the central bank. According to the bank, SBP’s foreign exchange reserves slipped to a critical level of $4.3 billion, hardly enough for three weeks’ worth of imports.

Since September, the ninth assessment of the International Monetary Fund (IMF) to approve the release of a fresh $1.1 billion tranche of money to Pakistan has been on hold, making external financing critical for Pakistan’s weakening economy. According to the bank, commercial banks maintained $5.8 billion in net foreign exchange reserves and $10.1 billion in total liquid reserves.

In September 2022, Sharif asserted that even allies viewed Pakistan as a country that regularly requested financial assistance. According to Sharif, Pakistan’s economy was already in jeopardy before the rains. He asserted that the situation had become even more difficult following the flood. He stated that when Pakistani officials visit a friendly country or speak on the phone with a friendly country, people believe Pakistan is there to grovel for money.

According to Sharif, Pakistan was allegedly on the edge of default when he assumed office in April 2022; however, the coalition government’s efforts prevented this and were able to at least partially contain the economic turmoil.