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Pakistan's prime minister said Thursday that the United Arab Emirates agreed to extend a $2 billion loan to his country and provide an additional $1 billion as his nation struggles to recover from devastating floods this summer and a dire economic crisis.
Prime Minister Shahbaz Sharif's office made the announcement after he met with the leader of the UAE, Abu Dhabi ruler Sheikh Mohammed bin Zayed Al Nahyan. It said Sheikh Mohammed agreed to the loan extension and the new loan, desperately needed as foreign currency reserves in the nation have plummeted to $5.5 billion — enough money for just under a month of imports.
"Both sides agreed to deepen the investment cooperation, stimulate partnerships and enable investment integration opportunities between the two countries," Sharif's office said.
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The Emirates did not immediately acknowledge the rollover of the loan and the granting of the additional billion. It said the meeting at Abu Dhabi's Al Shati Palace saw the two leaders discuss "the historical relations between the UAE and Pakistan and ways to enhance joint cooperation and expand its horizons in a way that serves the mutual interests of the two countries."
Sharif's visit to the UAE marks his third since becoming premier last April. The seven sheikhdoms of the Emirates are home to some 1.7 million Pakistanis, many manual laborers that power its economy and send money back to their nation.
Pakistan's Prime Minister Shahbaz Sharif, left, meets with Emirati leader and Abu Dhabi ruler Sheikh Mohammed bin Zayed Al Nahyan at Al Shati Palace in Abu Dhabi, United Arab Emirates, on Jan. 12, 2023. Pakistan's prime minister said that the UAE agreed to extend a $2 billion loan to his country to help recover from the devastating summer floods. (Hamad Al Kaabi/UAE Presidential Court, via AP)
Stung by food and fuel increases caused by Russia's war on Ukraine, Pakistan also has been struggling to cut into its government spending as well as inflation grows. That's worsened the economic crisis gripping a country where authorities have ordered malls to shut earlier to save on energy costs. The International Monetary Fund released a crucial tranche of $1.1 billion to Pakistan in August but talks have stalled since.
Saudi Arabia earlier this week floated investing $10 billion in Pakistan and increasing its deposits in the State Bank of Pakistan to $5 billion there.
On Wednesday, Sharif said several countries and some of the world’s institutions have pledged $9.7 billion to help Pakistan rebuild from the summer’s catastrophic flood that killed 1,739 people. That's far above the pledges — which have gone unfulfilled in other similar international conferences.
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The floods destroyed more than 2 million homes and caused more than $30 billion in damage.