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Pakistan’s worries rise with uncertainty in UAE’s loan assistance

Pakistan PM Imran Khan: Worries for Pakistan rise

Worries for Pakistan which is struggling with a battered economy has risen as the Imran Khan government has not got any missive from the UAE over extension of $1 billion loan. The UAE was slated to extend the loan amount as part of the overall $3 billion financial assistance package to Pakistan. Not just that, Pakistan could be in further trouble if UAE demands repayment over loans that have been already extended earlier.
Last year in August, Pakistan had to repay part of the loan that it received from once close ally Saudi Arabia too. In 2018 the two nations signed a $6.2 billion agreement. As part of this agreement, a $3.2 billion oil package was provided to the cash strapped Pakistan government by Saudi Arabia. The move was aimed at easing Pakistan’s external sector woes.
Pakistan had to repay $1 billion of the $3.2 billion loan. The repayment was possible only after China extended financial assistance to the Khan government.For Pakistan, trouble has been brewing since it has been trying to create a new alliance block with Turkey and Malaysia. Khan’s endeavour to set up a parallel Islamic countries’ block has become a bone of contention with the UAE and Saudi Arabia.
In November last year, the UAE had also banned issuance of visas to Pakistan nationals due to security concerns. The UAE is home to about 1.6 million Pakistanis. According to the State Bank of Pakistan, UAE comprising Abu Dhabi, Dubai, Sharjah, Ras-al- haimah, Ajman among others, has been the second largest remitter country to Pakistan only after Saudi Arabia. While UAE said that the move was temporary and aimed at containing the spread of coronavirus pandemic, it has caused embarrassment to Khan and his team.
According to East Asia Forum, Pakistan’s economic growth took a beating in 2020 due to the pandemic. However, growth had started slowing down even before the outbreak of the pandemic. “GDP growth was only 1.9 per cent in fiscal year 2018–19, falling from a decade-high 5.8 per cent the previous year when the Pakistan Tehreek-e-Insaaf (PTI) government came to power. While the  pandemic is playing a major role in slowing Pakistan’s economy, a downward trend was evident as early as mid-2018,” East Asia Forum noted.