Islamabad, April 6 (NationPress) The persistent reliance of Pakistan on external borrowing highlights a history of fiscal mismanagement, entrenched elite dominance, and an inability to expand the tax base or reform loss-making state enterprises, according to a report released on Monday.

The report from 'Khalsa Vox' reveals that Pakistan has committed to repaying $3.5 billion in debt to the United Arab Emirates (UAE) by April 2026, framing this decision as an act of "sovereign pride."

Furthermore, it indicates that Abu Dhabi has demanded the immediate repayment of funds lent in 2019 to aid Pakistan's balance of payments stability.

It asserts that Islamabad's claims of "dignity" sound hollow when juxtaposed with the reality of the situation.

"Pakistan sought a two-year rollover and a reduction in interest rates from 6.5 percent to approximately 3 percent, citing improved credit ratings and diminished global borrowing costs. The UAE rejected this request. What Islamabad portrays as a principled stance is, in truth, compliance with creditor demands amidst regional instability, exacerbated by the UAE’s own liquidity challenges due to tensions in the Middle East following the US-Israel-Iran conflict," the report elaborates.

For decades, Gulf deposits have acted as essential lifelines; their sudden withdrawal highlights the fragility of this dependence. This situation reveals a fundamental contradiction in Pakistan's foreign policy: a continuous desperation to project a strong global image, while the economic reality tells a contrasting tale.

Labeling Pakistan's rhetoric of dignity as a mask for its "beggar’s bowl" image, the report suggests that the urgency to repay is a strategy to reset the creditor-debtor relationship and to impress the International Monetary Fund (IMF) and global markets.

However, this action by the Pakistani authorities risks projecting weakness—"a nation so financially strained that it must deplete reserves to avoid the appearance of ongoing begging," it warns.

The implications are multifaceted. Reserves represent more than mere figures; they are crucial for financing imports of fuel, food, and machinery in an economy already struggling with inflation, slow growth, and structural deficits. A significant reduction in reserves could necessitate stricter monetary policies or additional borrowing under more severe conditions, undermining the very stability that the repayment is supposed to safeguard. This also puts a strain on relationships with other Gulf nations, which may now question Pakistan’s reliability as a custodian of deposits," the report emphasizes.

"Rather than enhancing its global standing, this action illustrates vulnerability. Pakistan's leadership appears more focused on performative sovereignty than on achieving sustainable sovereignty," it continues.

The report concludes that for the concept of "national dignity" to hold any real weight, Pakistan must begin constructing an economy that does not oscillate between debt rollovers and repayment crises.

"While Pakistan's decision to return the UAE funds may temporarily boost pride, it inflicts long-term economic damage. The world perceives not a confident nation, but one still ensnared in a cycle it claims to have escaped. Until Islamabad confronts this truth—rather than cloaking it in the language of dignity—such setbacks will persist," the report cautions.