AMID the US-Israel war on Iran, Pakistan earned global recognition for its diplomatic efforts to promote peace. Yet, even as Islamabad projec­ted itself as a stabilising force, a situation eme­rged that nearly exposed its economic fragility. The UAE recalled $3.5 billion in deposits, which, together with an impending repayment of a $1.3bn Euro­bond, created immediate pressure on Pakistan’s buffers painstakingly rebuilt over the past three years. The UAE had earlier assured the IMF it would maintain its exposure until September 2027, but strategic considerations evidently outweighed these commitments, underscoring the unreliability of bilateral support, and the imperative for regaining economic sovereignty.

In this moment, Saudi Arabia stepped in with a commitment of $3bn in additional deposits to help Pakistan maintain its foreign exchange reserves and avert a fresh external financing scare that could derail its Extended Fund Facility program­­me. It also indicated that its existing $5bn deposit would no longer remain subject to the earlier rollover arrangement, raising Pakistan’s liabilities to Riyadh to $8bn, highlighting deepening interdependence in both security and economic affairs.

While the Saudi intervention eased the immediate pressure, the UAE’s recall of deposits laid bare a deeper reality: Pakistan’s resilience remains heavily contingent on its partners’ goodwill rather than internal strength. It may be recalled that when the SIFC was established, it pledged to attract $100bn in investment from the GCC countries — an ambition yet to materialise. More importantly, the recent episode exposed the illusion of IMF-supported stabilisation. It raises a fundamental question: what have three back-to-back IMF programmes since 2019 delivered in terms of........

© Dawn