IMF Flags Concern Over UAE Deposit Rollover
ISLAMABAD: The International Monetary Fund (IMF) has expressed concern over Pakistan’s failure to secure a one-year rollover of $2 billion in deposits from the United Arab Emirates (UAE), although the State Bank of Pakistan (SBP) assured the visiting IMF delegation that short-term arrangements are in place and negotiations are ongoing for a longer-term extension.
Finance Minister Muhammad Aurangzeb told reporters after a meeting of the National Assembly Standing Committee on Finance that there was no issue regarding the rollover and questioned why the media was portraying it as a problem.
Finance Minister Dismisses Rollover Fears
Sources said the IMF may also seek a meeting with the UAE ambassador to obtain fresh assurances regarding the rollover.
An IMF review mission arrived in Karachi and Islamabad on Wednesday. A member of the team held discussions with senior SBP officials and raised concerns over the failure to secure a one-year rollover from the UAE.
Meanwhile, Deputy Prime Minister and Foreign Minister Ishaq Dar told the media that the UAE had not withdrawn its deposits and that discussions were underway for a longer-term rollover. However, a senior government official, speaking on condition of anonymity, said the situation had become worrisome as Pakistan had yet to receive written confirmation from the UAE. The government had initially secured only a two-month temporary rollover and is now negotiating new terms. The changing situation, the official said, will have to be clearly reflected in the ongoing review with the IMF.
Current Account Swings Amid External Pressure
In addition, technical-level talks between the IMF mission and SBP officials covered foreign exchange reserves, monetary policy, exchange rate management, countering the financing of terrorism, anti-money laundering measures, and banking regulations.
During an introductory session, the SBP governor and management informed the IMF that Pakistan recorded a current account surplus of $121 million in January, compared to a deficit of $393 million in the same month last year.
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However, during the first seven months of the current fiscal year, the current account deficit stood at $1.74 billion, compared to a surplus of $564 million in the corresponding period last year, indicating pressure on external payments.
Technical Talks Cover Reserves, AML Measures
Officials told the IMF that a total of $3 billion in UAE deposits is currently held with the SBP. Of these, two deposits of $1 billion each matured on January 17 and 23 and were initially rolled over for one month, with their extended maturity dates falling on February 16 and 23. These have now been temporarily extended until April 16 and 23. Repayment of the third tranche is also expected near its due date. Pakistan may have to pay interest exceeding 6.5 percent on these deposits.
