The money will be used to boost foreign currency reserves at Pakistan’s central bank as the country faces a balance of payment problem.
The United Arab Emirates (UAE) will soon deposit $3 billion into the State Bank of Pakistan to help cash-strapped Islamabad overcome its economic woes, officials said on Friday.
Pakistan is facing a balance of payment crisis as its foreign exchange reserves have plummeted in face of falling exports and investments from abroad.
UAE’s state-run Abu Dhabi Fund for Development announced it will be depositing the “amount in coming days to enhance liquidity and monetary reserves of foreign currency” at Pakistan’s central bank.
ADFD normally gives concessionary loans to developing countries. It remain unclear if the transfer of funds is a loan.
Pakistani Prime Minister Imran Khan thanked UAE for helping his country in a difficult time.
Pakistan’s Information Minister Fawad Chaudhry later confirmed the amount will shortly be transferred.
The development comes amid Pakistan’s negotiations with the IMF to secure an $8 billion bailout package.
But Pakistani officials have been wary of the IMF imposing harsh conditions compared to the last bailout in 2013 when Islamabad was given repeated waivers and avoided serious reforms after receiving $6.7 billion.
Khan’s government is betting on key allies for support as it wants to avoid being completely dependent on the IMF.