UAE asks Pakistan to repay $3.5B debt after airport talks collapse, raising fears over forex reserves and Gulf remittances. Photo: Gemini.
Pakistan is facing heat from the United Arab Emirates. After cancelling the airport deal earlier, UAE has asked Islamabad to clear the dues immediately. Pakistan is preparing to return $3.5 billion in debt to the United Arab Emirates (UAE) before the end of the month.
Reports quoting a senior Pakistani official confirming the decision, saying the move was intended to safeguard the country’s “national dignity,” even though it is expected to put additional pressure on Pakistan’s foreign exchange reserves.
According to a report by Dawn, the official said the repayment would be completed as quickly as possible.
“The amount will be returned as soon as possible,” the official said, adding that “national dignity could not be compromised for financial considerations.”
Reports indicated that Abu Dhabi requested the immediate return of the funds, prompting Islamabad to move forward with the repayment despite the potential economic strain.
The repayment decision comes against the backdrop of another setback in Pakistan–UAE ties. Earlier, the UAE withdrew from discussions aimed at operating Islamabad International Airport, negotiations that had been underway since August 2025.
The development surfaced shortly after Sheikh Nahyan bin Mubarak Al Nahyan made a brief three-hour visit to New Delhi.
According to Pakistan’s The Express Tribune, the proposed arrangement stalled because the UAE was unable to find a suitable local partner to handle airport operations in Pakistan. The project had initially generated considerable optimism, but the lack of a viable domestic partner eventually halted progress.
The shift comes at a time when Pakistan has strengthened its relationship with Saudi Arabia. In September 2025, Islamabad signed a defence pact with Riyadh that effectively treats an attack on either country as an attack on both.
Historically, the UAE has been among Pakistan’s most significant economic partners. The Gulf nation hosts a large Pakistani diaspora and maintains longstanding links with Islamabad in areas such as trade, defence cooperation, and the energy sector.
Amid signs of strain in bilateral ties, analysts are now raising concerns about how the situation could affect Pakistani workers employed in the Gulf.
Remittances from Gulf countries remain a vital pillar of South Asian economies. Analysts at Capital Economics estimate that remittances contribute roughly three to five percent of Pakistan’s GDP.
More than 5.5 million Pakistanis, many of them unskilled labourers, work across the Gulf region, particularly in the UAE and Saudi Arabia. The money they send home plays a critical role in sustaining families in Pakistan.
Zubair Amin is a Senior Journalist at NewsX with over seven years of experience in reporting and editorial work. He has written for leading national and international publications, including Foreign Policy Magazine, Al Jazeera, The Economic Times, The Indian Express, The Wire, Article 14, Mongabay, News9, among others. His primary focus is on international affairs, with a strong interest in US politics and policy. He also writes on West Asia, Indian polity, and constitutional issues. Zubair tweets at zubaiyr.amin
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