Pakistan is reportedly asking the UAE for a rollover of its $1 billion loan before its maturity period, according to multiple reports in local media.

Prime Minister Shehbaz Sharif is expected to send a letter of request to President Sheikh Mohammed bin Zayed Al Nahyan requesting the rollover, Pakistan’s ARY News reported, citing unnamed sources from the country’s Ministry of Finance.

The $350 billion South Asian economy has been facing a challenging payment crisis in recent months. In January, the UAE agreed to lend $1 billion to Pakistan and roll over an existing $2 billion loan after the Asian country said it had suffered more than $30 billion in damages as floodwaters swept across the country from in July and August of last year.

Earlier this week, credit rating firm Moody’s Ratings said emerging markets such as Pakistan would likely draw on its foreign exchange reserves to repay its maturing foreign debt, which will keep near-term default risks high.

The Pakistani government has also engaged with the IMF to secure a new loan programme after the standby arrangement of $3 billion concluded in April 2024.

A report by Reuters stated in April that Pakistan could secure a staff-level agreement by early July, quoting the country’s finance minister.

(Writing by Bindu Rai, editing by Seban Scaria)