This handout image provided by the UAE Presidential court on January 12, 2023 shows UAE President Sheikh Mohamed bin Zayed al-Nahyan posing for a picture with Shehbaz Sharif, Prime Minister of Pakistan, prior to their meeting, at Al Shati Palace in Abu Dhabi. (Photo by UAE PRESIDENTIAL COURT / AFP)
Dubai: The United Arab Emirates agreed on Thursday to lend $1bn to Pakistan and roll over an existing $2bn loan, Pakistan's information minister said, offering some respite to a nation still reeling from devastating floods.
Pakistan says it suffered more than $30bn of damage as floodwaters swept across the country from July-August.
The loan announcements came as Pakistan's prime minister, Shehbaz Sharif, kicked off a two-day visit to the United Arab Emirates.
He met UAE President Sheikh Mohammed bin Zayed al-Nahyan, and was due to discuss business and economic opportunities with other officials and business leaders, information minister Marriyum Aurangzeb said.
"We share a resolve and understanding that the continuous efforts need to be made to further strengthen trade, investment and economic relations," Sharif said in a statement from his office.
As a ninth review by International Monetary Fund (IMF) to clear the release of the next $1.1bn tranche of funds to Pakistan has been pending since September, the external financing is crucial for the country's broken economy.
Pakistan's central bank foreign reserves fell to a critical level of $5.5bn in the week ending December 30, barely enough for three weeks of imports.
The IMF and Pakistan signed a $6bn bailout in 2019 that was topped up with another $1bn earlier this year.
The lender wants Pakistan to take fiscal measures to meet budgetary targets, introduce reforms in power and energy sectors and review subsidies to farming and export sectors.
IMF officials met Pakistan's finance minister, Ishaq Dar, on Monday on the sidelines of a Geneva climate conference that made more than $9bn of pledges for flood recovery.
Dar said on Wednesday Pakistan was already working on the fiscal contingency plan
to shed energy sector debt and review the subsidies.
Long-time ally Saudi Arabia has said is also considering investing $10bn in the South Asian nation of 220 million and increasing its deposits in the country's central bank from $3bn to $5bn.
