he United Arab Emirates recently asked Pakistan to return by the end of April $2 billion lent to support foreign exchange operations of the State Bank. The money was provided when it was most needed. The transaction was highly appreciated in Pakistan and acknowledged as a gesture of goodwill. Now that the UAE needs the money, Pakistan must repay it and harbour no ill feeling. The deposits, while they were held by Pakistan, allowed its government to undertake important reforms that have helped the economy. Most economic indicators, including credit worthiness and current account bottom-line have improved. The national economy is on a positive trajectory. Greater independence, credibility and reduced reliance on international support are expected in the future.

Having gone through a rough patch, Pakistan is now headed in the right direction. Besides the IMF support, deposits and loan rollovers by friendly countries have been pivotal in this regard. Had they not lent a helping hand to Pakistan when it mattered most, it would have been very difficult for the country to come out of the mess it was in. Today, foreign exchange reserves are considerably larger. Additional buffers exist in the form of bank deposits and gold. The foreign exchange reserves stand at ~$16.4 billion: a four year high. Public sector bank deposits stand at ~$5. 4 billion. The gold reserves are close to $10 billion. It is heartening to note that foreign exchange reserves rose for thirty-four consecutive weeks. This has resulted in improved import cover and strengthened sovereign flexibility.

Today, Pakistan is in a position to repay some of the money provided to it by various friendly countries. Pakistan also aims to seek no further IMF assistance. Pakistan has made early repayments amounting to Rs 3.6 trillion ($12.9 billion) over the last eighteen months. This has reduced rollover or refinancing risk and brought debt-to-GDP ratio down to ~70 percent (from ~75 percent four years ago). The money provided by the UAE is no longer needed as critically.

The International Monetary Fund and bilateral lenders have acknowledged the measures taken by the government of Pakistan to improve the country’s economic health.

Pakistan has been able to craft a strategy for debt repayments in a more manageable fashion. Due to the current situation in the Middle East, the energy prices are rising. This may become a source of concern.

The measures the government has taken to improve country’s economic health have been acknowledged by the IMF and bilateral lenders. Friendly countries are still willing to extend needed support. The IMF programme is still intact and a Staff Level Agreement has been signed to extend the current fund facility.

There has been an increase in the remittances from the Gulf countries. Pakistan has emerged as a regional trade and trans-shipment gateway. Pakistani port facilities can absorb the additional traffic.

There is good news from the telecom sector as well. Pakistan is becoming a more attractive destination for telecom companies following the recent 5G internet spectrum auction.

The loans Pakistan sought from its friends and the IMF have to be paid back at some point in time. The recent geo-political events do not change this.

The UAE is currently in a tough situation. A war is being fought in the region. Both oil production and trade have been affected. Pakistan must extend all assistance it can to the brotherly country in its hour of need.

The writer is a communication strategist at the Institute of Regional Studies, Islamabad. She can be reached [email protected]