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News India Live, Digital Desk: Another big diplomatic and financial crisis has arisen for Pakistan, which is struggling with economic crisis. The United Arab Emirates (UAE) has ordered immediate repayment of the loan of US $ 3.5 billion (about Rs 29,000 crore) given to Pakistan. This decision has come at a time when clouds of war are looming in the Middle East and Pakistan’s increasing military closeness with Saudi Arabia has angered the UAE. Now, with a heavy heart, Pakistan has decided to return the entire amount by the end of this month. Has ‘Defence Deal’ with Saudi Arabia become a bone of contention? According to inside sources, the main reason for this displeasure of UAE is the ‘Strategic Mutual Defense Agreement’ (SMDA) signed between Pakistan and Saudi Arabia. Under this secret defense deal signed in September 2025, Pakistan has promised to provide military security to Saudi Arabia. Given the increasing competition between Saudi Arabia and UAE in regional politics, Abu Dhabi has considered Pakistan’s move as a kind of ‘betrayal’. This is the reason that the loan which till now could easily be ‘rolled over’ (extended period), has now been demanded back by the UAE under any circumstances till 17th April. The ‘trust’ was deposited in the State Bank, now the treasury will be empty. According to the report of ‘Geo News’, this huge amount of 3.5 billion dollars was kept as a ‘safe deposit’ with the State Bank of Pakistan (SBP), which was used by Pakistan for its foreign exchange reserves. Used to show it as stable. Pakistan was also paying a hefty interest of 6 percent on this amount. The UAE had stopped extending the tenure of this loan since December 2025—first it was postponed for one month and then for two months, but now the final deadline has been fixed for April 17. Shortage of funds or diplomatic pressure? The UAE has officially cited the ongoing Iran-US war in the Middle East as the reason for the withdrawal of funds, in which it is in urgent need of its resources. However, there is discussion in diplomatic circles that this is like teaching a lesson to Pakistan for its ‘two-pronged’ policy. In the current financial year, Pakistan also needs rollover of $5 billion from Saudi Arabia and $4 billion from China. If other countries also pull out on the heels of UAE, then the risk of bankruptcy may arise again for Pakistan. There will be a direct impact on foreign exchange reserves. Currently, Pakistan has about 21 billion dollars in foreign exchange reserves. Technically, Pakistan is capable of repaying this debt, but the withdrawal of $3.5 billion in one go may cause the Pakistani rupee to dive again. In the coming months, Pakistan may once again have to approach international financial institutions to repay its other debts. Saudi Arabia’s military help and Riyadh’s support in the Iran conflict is now costing Pakistan a lot on the economic front.