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News India Live, Digital Desk:For Pakistan, which is facing economic devastation and dwindling foreign exchange reserves, a big and relief news has come from the Gulf country United Arab Emirates (UAE). When Pakistan’s treasury was on the verge of becoming empty, the UAE, showing generosity, announced a loan of $ 3 billion (about more than Rs 25,000 crore) to Pakistan. This ‘surprise’ help has not only saved Pakistan from becoming an immediate defaulter, but has also given some oxygen to the Shehbaz Sharif government on the international stage.
The sinking economy got support from UAE
Pakistan is going through a severe economic crisis for the last several months. Inflation was skyrocketing and foreign exchange reserves had fallen so much that the country had no money left even to import essential goods. In such a situation, this 3 billion dollar loan from UAE will work like a ‘life-saver’. Experts say that this amount will be deposited in the Central Bank of Pakistan (State Bank of Pakistan), which will improve the creditworthiness of the country and the falling value of Pakistani rupee in the global markets will be controlled.
What are the terms and conditions of this huge loan?
Although UAE has provided this huge help, there is talk in diplomatic circles that this money is only to ‘support’ Pakistan’s foreign exchange reserves and not for spending. Usually such loans are given in the form of ‘rollover’, which means that Pakistan will use the money to improve its balance sheet and win the trust of international rating agencies. This loan has come at a time when Pakistan is struggling to get the next installment from the IMF.
Shahbaz government’s strength increased, reply to opponents
The opposition is continuously attacking the government regarding political instability and increasing debt within Pakistan. In such a situation, Shehbaz Sharif is presenting this help of UAE as his big diplomatic victory. In recent times, the Prime Minister of Pakistan had made several visits to Gulf countries, the result of which has now been seen in the form of this big financial package. This is also expected to help Pakistan pay its oil and gas import bills.
Has the economic crisis in Pakistan been averted?
Even though this amount of $3 billion seems big, experts believe that it is not a permanent solution to Pakistan’s problems. Pakistan’s total foreign debt and its liabilities are much more than this amount. The UAE’s help has definitely saved it from the danger of ‘default’ for some time, but to bring the country back on track, there is a dire need for tough economic reforms and industrial development. At present, there is an atmosphere of celebration in Islamabad after this help and the government is seeing it as a New Year gift.