In a significant development for Pakistan’s economic recovery, Saudi Arabia is set to invest up to $25 billion in the country over the next two to five years, according to Pakistan’s caretaker Prime Minister, Anwaar-ul-Haq Kakar. The investment is expected to cover various sectors, including mining, agriculture, and information technology, and is part of Pakistan’s broader efforts to boost foreign direct investment. This move comes as Pakistan grapples with economic challenges and seeks to address its balance of payments crisis.
Pakistan’s caretaker government has assumed responsibility for the nation’s economic recovery following the approval of a $3 billion loan program by the International Monetary Fund (IMF) in July. This program played a crucial role in averting a sovereign debt default, offering a lifeline to Pakistan’s fragile financial situation.
Prime Minister Kakar made this announcement during a press briefing at his official residence. While the specifics of Saudi Arabia’s investment projects were not disclosed, Kakar emphasized the importance of increasing foreign direct investment in Pakistan and diversifying the sectors in which these funds would be utilized.
It’s important to note that this investment, if confirmed, would mark Saudi Arabia’s most significant financial commitment to Pakistan to date.
Pakistan, a long-standing ally of Saudi Arabia, is grappling with a balance of payments crisis and requires substantial foreign exchange reserves to address its trade deficit and meet its international debt obligations in the current fiscal year.
While specific investment projects were not detailed, there is speculation that Saudi Arabia may consider participating in Pakistan’s Reko Diq gold and copper mine. Barrick Gold Corp, the owner of a 50% stake in the mine, has expressed openness to bringing in Saudi Arabia’s wealth fund as a partner. Pakistan’s untapped mineral deposits, estimated at approximately $6 trillion, present a compelling opportunity for investment.
Kakar’s government, which is intended to serve as an interim administration overseeing national elections scheduled for November (likely to be delayed), is also determined to advance privatization efforts. Two privatization deals, potentially involving state-run power sector entities, are expected to be completed within the next six months. Additionally, Kakar’s administration is exploring privatization options for government-owned enterprises beyond the energy sector.
Pakistan’s state-owned enterprises have long been a source of financial concern, contributing to the country’s economic challenges. Most recently, Pakistan included the struggling state-run Pakistan International Airlines in its privatization agenda.
As Pakistan navigates its path to economic recovery, the prospect of substantial Saudi investment offers a ray of hope for stabilizing its financial situation and promoting sustainable growth.
