The United Arab Emirates (UAE) agreed to roll over an existing loan of $2 billion and give an additional loan of $1bn to Pakistan, a statement from the Prime Minister’s Office said on Thursday.

The statement was issued after a meeting between UAE President Sheikh Mohamed bin Zayed Al Nahyan and Prime Minister Shehbaz Sharif in Abu Dhabi. The premier is on a two-day visit to strengthen economic, trade and investment ties with the country.

In the statement, the PM Office said that during the meeting, Sheikh Mohamed bin Zayed praised the historical relations between UAE and Pakistan and the valuable contributions of Pakistanis residing in the Middle Eastern country.

“The two leaders discussed the fraternal relations existing between Pakistan and the UAE; and explored ways and means to further strengthen these ties, especially in the fields of trade, investment and energy. The two leaders also had an exchange of views on regional and international issues of mutual interest,” the statement said.

The two sides agreed to deepen investment cooperation, stimulate partnerships and enable investment integration opportunities, it added.

PM Shehbaz invited the UAE president to visit Pakistan, the PMO said, adding that Sheikh Mohamed bin Zayed Al Nahyan had agreed and the dates would be decided through diplomatic channels.

PM Shehbaz will also meet with Sheikh Mohammad bin Rashid Al Maktoum, the UAE’s vice president and prime minister as well as the ruler of Dubai. He will also hold meetings with Emirati businessmen and investors to discuss ways to enhance bilateral trade and investment, the statement said.

This is the premier’s third visit to the UAE since assuming office in April 2022.

PM Shehbaz first visited Abu Dhabi for a day-long trip to the UAE in April last year. His second visit was on his way back from the UK in May when he touched down in the UAE to offer condolences over the death of its former president Sheikh Khalifa bin Zayed Al Nahyan.

The prime minister’s trip comes after Chief of Army Staff (COAS) General Asim Munir’s visit to the Mideast nation.

UAE state news agency WAM reported on earlier this week that COAS Munir called on the Emirati president at Qasr Al Shati Palace and reviewed bilateral cooperation between the two countries.

The UAE’s rollover of the loan comes as Pakistan faces a severe cash crunch, with foreign exchange reserves depleting to an eight-year of $5.576bn during the week that ended on Dec 30, 2022. This amounts to three weeks of imports. Later, media reports said the reserves fell further to $4.5bn after loan repayments to two UAE banks.

This decline left no space for the government to pay back its foreign debts without borrowing more from friendly countries.

Saudi Arabia inks agreement to finance oil derivatives

Separately, the chief executive office of the Saudi Fund for Development (SFD), Sultan Abdulrahman Al Marshad, and Ministry of Economic Affairs Secretary Dr Kazim Niaz, signed an agreement to finance oil derivatives worth $1 billion to Pakistan.

According to a handout issued by the Finance Division, the agreement was signed in Islamabad in the presence of Saudi Arabia and Pakistani officials.

“Aimed at supporting Pakistan’s economy, sector growth, and navigating economic challenges, the strategic agreement signed today comes as a continuation of the support provided by the government of Saudi Arabia to the brotherly country Pakistan to build a sustainable economy,” the handout said.

It noted that in 2019 and 2021, the SFD signed agreements to finance oil derivatives with a value of $4.44bn.

“The agreement marks the latest steps taken by the government of Saudi Arabia through the SFD and the Pakistani authorities to enhance development in the country.

“Since the Fund’s establishment, the SFD has supported more than 40 projects and programs in different development sectors valued approximately at $1.4bn to finance Pakistan’s energy, water, transportation, and infrastructure projects,” the statement said.