Pakistan foreign office made the announcement on Tuesday a day after a meeting between Pakistan Foreign Minister Shah Mahmood Qureshi and his UAE counterpart Sheikh Abdullah bin Zayed Al Nahyan, Dawn reported.
Qureshi and his UAE counterpart held detailed discussions on Monday evening after the delegation-level talks during the foreign minister's three-day visit to the Gulf state.
The loan was made in 2019 to help Pakistan avert a potential balance of payments crisis.
The loan was matured in March and the incumbent Pakistan government was worried that like Saudi Arabia, the UAE might ask Pakistan to return the money.
In March, it was reported that the UAE had demanded back USD1 billion.
Pakistan is facing a serious debt crisis and an ongoing pandemic has worsened the situation in the country.
The International Monetary Fund (IMF) has recently forecast a subdued economic growth rate of 1.5 per cent for Pakistan, coupled with a higher rate of inflation and rising unemployment, during the current fiscal year.
In its World Economic Outlook (WEO) 2021 report, the Washington-based lending agency has projected an 8.7 percent average rate of inflation, current account deficit at 1.5pc of GDP and unemployment rising by 0.5pc to 5pc during the current fiscal year.
Till December, external debt and liabilities totalled USD 115.7 billion compared to USD 112.7 billion till June-end. Total external debt and liabilities were USD 110.7 billion till December 2019, according to the State Bank of Pakistan (SBP).
The Pakistan government had contracted USD 10.447 billion worth of new foreign loans from multilateral institutions and commercial banks during the fiscal year 2019-20.
Last month, the IMF agreed to release the next tranche of USD 500 million for Pakistan after approving four pending reviews of the country's economic progress, official sources in the US capital said. The approval revives the USD 6 billion IMF programme after it remained latent for over a year.
Last year, Pakistan had managed to pay back part of the loan secured from Saudi Arabia with the help of China. Beijing had agreed to provide USD 1.5 billion financing line to repay the USD 2 billion Saudi Arabia debt.