KARACHI – Major financial development involving United Arab Emirates made headlines as $1 billion out of $3 billion deposited by the UAE in the State Bank of Pakistan will be converted into equity investment, a smart move that will permanently remove this amount from Pakistan’s list of repayable foreign liabilities.
Deputy Prime Minister Ishaq Dar confirmed landmark agreement during the recent visit of the UAE President to Pakistan. Under the arrangement, the Gulf nation will purchase shares worth $1 billion in companies linked to Fauji Foundation, one of Pakistan’s largest and most influential business groups. Once conversion is completed, Islamabad will no longer be required to repay this portion of the deposit.
Dar explained that transaction will effectively cut Pakistan’s debt burden by $1 billion, as amount will no longer be classified as loan but as foreign direct investment. The remaining $2 billion of UAE deposit will continue to be held at the State Bank.
UAE–Fauji Foundation Deal?
Fauji Foundation was established as welfare trust for retired military personnel and is managed by retired officers, the companies operating under it function on fully commercial lines and are active across key sectors of the economy.
Under agreement, $1 billion of the UAE’s existing deposit in Pakistan will be transformed into equity by purchasing shares of Fauji Foundation backed companies.
The government will compensate Fauji Foundation in Pakistani rupees for shares sold, thereby ending Pakistan’s obligation to repay $1 billion in foreign currency. Giants such as Mari Energies and Fauji Fertilizer are likely candidates for share sales due to their size and strategic importance in the Foundation’s portfolio.
For the unversed, Pakistani government did not compel UAE to invest in Fauji Foundation as investors choose opportunities based on profitability. The government however presented multiple investment options, including agriculture, mining, energy, and other priority sectors, and UAE independently chose to invest in the Fauji Foundation due to its commercial appeal.
Fauji Foundation remained Pakistan’s largest business group. According to Wealth Perception Index 2025 released by Economic Policy and Business Development (EPBD) think tank, the Foundation holds assets worth $5.9 billion including Mari Energies in oil and gas exploration, Fauji Fertilizer, Fauji Cement, and Askari Bank.
Pakistan offers Fauji Foundation shares to UAE in $1 Billion Deal, confirms Deputy PM Dar
