The United Arab Emirates has demanded that Pakistan immediately repay a $3.5 billion loan, creating new pressure on Islamabad as it faces an ongoing economic crisis. The demand, made earlier this month, threatens to deplete nearly one-fifth of Pakistan’s central bank reserves and could jeopardize the $7 billion IMF bailout package promised in 2024. Saudi Arabia has since stepped in, providing a $3 billion loan to strengthen Pakistan’s reserves and extending an existing $5 billion loan for more than a year.

Analysts view Abu Dhabi’s sudden move as a reflection of growing dissatisfaction with Pakistan’s softer stance toward Iran and its mediation efforts in conflicts involving the United States and Israel. The situation also highlights underlying competition between Saudi Arabia and the UAE, whose relations have been strained over Yemen and regional influence. UAE’s closer economic ties with India have further complicated its relationship with Islamabad.

Pakistan’s foreign ministry described the repayment as a routine financial transaction and denied any diplomatic rift, though officials privately expressed frustration. Observers see the episode as part of shifting alliances and power balances in the Gulf region.