UAE Deadline to Pakistan: The UAE has taken a tough stance on the $2 billion loan it gave Pakistan, giving it only one month to repay it at the current interest rate of 6.5 percent.

UAE Deadline to Pakistan: Pakistan's troubles show no signs of abating. The United Arab Emirates (UAE) had lent Pakistan $2 billion, which it has now promised to repay within the next month at the current interest rate of 6.5 percent. Citing senior officials from the federal government and the central bank, The Express Tribune reported that the UAE has extended two loans of $1 billion each, which mature on January 16 and 22.  

UAE takes tough stance on loans 

He said the loan has been extended for a month to allow time for further negotiations on the term and interest rate. Pakistan wants a two-year rollover on the loan from the UAE and an interest rate of approximately 3 percent.

However, the UAE has taken a tougher stance, now granting only 30 days. Officials said a further request for a loan extension would be made because repayment would create a financing gap that would need to be filled from other sources. 

Why did UAE take strict action?

It is believed that the UAE has decided to take a tough stance against Pakistan, citing Pakistan's support for Saudi Arabia in the dispute between Saudi Arabia and the United Arab Emirates over its support for separatist groups in Yemen. Requiring Pakistan to suddenly repay such a large sum of money, all at once, and within such a short time, will be a challenge.

It remains to be seen how the UAE will respond to Pakistan's request for a loan repayment extension. Under Pakistan's $7 billion program with the International Monetary Fund, the UAE, Saudi Arabia, and China have pledged to hold a total of $12.5 billion in deposits with the State Bank of Pakistan until the program ends in September next year.