Pakistan is caught between a rock and a hard place as the United Arab Emirates (UAE) has demanded the full repayment of a $3 billion loan (approx. ₹27,957 crore). Struggling with a fragile economy, Prime Minister Shehbaz Sharif’s administration is now desperately looking for alternative sources to prevent a default.

Speaking to Bloomberg in Washington, Finance Minister Muhammad Aurangzeb confirmed that the country is considering borrowing from commercial banks and bilateral lenders to maintain its foreign currency reserves. Reports suggest that Islamabad is currently in talks with China and Saudi Arabia to bridge the gap. For the first time in seven years, Pakistan failed to secure a new loan agreement with the UAE this April, adding to the fiscal pressure.

As of late March, Pakistan’s forex reserves stood at a mere $16.4 billion, barely enough to cover three months of imports. Aurangzeb, currently attending the IMF and World Bank Spring Meetings, expressed confidence in the country’s ability to repay lenders but admitted that the conflict in West Asia and rising oil prices have strained the national treasury. Pakistan is now pinned on the upcoming $1.3 billion disbursement from the IMF’s $7 billion bailout program to stabilize its volatile economy.