ISLAMABAD: The United Arab Emirates (UAE) has confirmed a rollover of $2 billion deposits with Pakistan, the Pakistani central bank said on Thursday.

The Gulf country has rolled over the deposits with Pakistan’s central bank since 2023, helping the South Asian country shore up its foreign exchange reserves, strengthen its currency and secure financial bailouts from the International Monetary Fund (IMF).

Pakistan’s $350 billion economy has struggled for decades with boom-and-bust cycles and the South Asian country secured a $7 billion, 37-month loan program from the IMF in Sept. last year. The next review of the program is expected in February.

“UAE has confirmed rollover of its two deposits of $1.0 billion each placed with State Bank of Pakistan for another one year, which were maturing in January 2025,” the Pakistani central bank said in a statement.

The development comes more than a week after Prime Minister Shehbaz Sharif met UAE President Sheikh Mohamed bin Zayed Al-Nahyan in the Pakistani city of Rahim Yar Khan. Sharif later told his cabinet that the UAE president had agreed to roll over the $2 billion loan, which was due to mature this month.

The UAE is Pakistan’s third-largest trading partner after China and the United States (US), and a major source of foreign investment, valued at over $10 billion in the last 20 years, according to the UAE foreign ministry. It is also home to more than a million Pakistani expatriates, who are one of the major sources of remittances to the South Asian country.

In January last year, Pakistan and the UAE signed multiple agreements worth more than $3 billion for cooperation in railways, economic zones and infrastructure, a Pakistani official said, amid Pakistani caretaker prime minister Anwaar-ul-Haq Kakar’s visit to Davos, Switzerland to attend 54th summit of the World Economic Forum (WEF).

Pakistan’s foreign exchange reserves stood at $16.45 billion as of January 10, with SBP-held reserves at $11.73 billion, according to the central bank.

In the past, Pakistan has also secured external financing, a key condition for IMF bailouts, from longtime allies Saudi Arabia and China.