Pakistan expects over $20 billion from Saudi Arabia, UAE to stave off economic crisis

ISLAMABAD: The Pakistani government is expecting over $20 billion in investments from Saudi Arabia, the United Arab Emirates, and Qatar in various fields, a senior official said on Wednesday, as the South Asian country looks to overcome its economic crisis and avoid defaulting on its obligations by securing external financing. 

Pakistan constituted a Special Investment Facilitation Council (SIFC) this week, of which the country’s army chief will be a member and where the military will play a key role. The council's main purpose would be to attract foreign investment in the country. The prime minister will be presiding over the council's meeting. 

Cash-strapped Pakistan faces its worst economic crisis to date, with months of delay in securing funding from the International Monetary Fund (IMF) causing its forex reserves to decline rapidly. Pakistan, suffering from months-long political turmoil, has been caught up in an acute balance of payments crisis while inflation remains at an all-time high. 

“We have been seeking deposits and loans from our friendly countries, but from now onwards, they will be investing in different fields in Pakistan,” Rana Ihsan Afzal, a coordinator to Prime Minister Shehbaz Sharif on commerce and industry, told Arab News. 

“The government is initially expecting over $20 billion in investments from Saudi Arabia, UAE, and Qatar. We already have investment pledges from these countries and the constitution of the SIFC would help expedite it.” 

Afzal, however, did not provide a specific timeline for when Pakistan would receive the investments. The official said that Pakistan's friendly countries are "keen to invest" in all sectors including energy, agriculture, construction of dams, education, and health. 

In recent months, Saudi Arabia and the UAE deposited billions of dollars in Pakistan’s central bank to shore up the country’s foreign exchange reserves and keep its economy afloat. In April, both Saudi Arabia and the UAE pledged $2 billion and $1 billion, respectively, in external financing to Pakistan. This was one of the IMF's foremost conditions imposed on Pakistan for the revival of a $6.5 billion bailout program, which has remained stalled since November last year.

The council also provides the military a seat at the economic table, with the army chief being a member of its apex committee, and the army itself serving as the national coordinator for both the apex and executive committees. An army official will also be the director general of the body’s implementation committee. 

Pakistan army’s media wing, the Inter-Services Public Relations (ISPR), did not respond to calls and texts seeking comments for this story. 

 Afzal defended the army's inclusion in the council, saying that the presence of its officials in the SIFC would help expedite the investment process. 

“There are multiple NOCs [no objection certificates] and clearances that an investor requires to obtain from security institutions, therefore, their presence in the council would help expedite the process,” he said. 

“Bureaucratic hurdles and direct access to security institutions were impeding the investment process in the country, [but now], the presence of all of them under one roof would help remove the obstacles and allow the issuance of the required NOCs and documentation at a fast pace for the investors," Afzal added. 

Security clearances and NOCs from security institutions for investors usually lead to prolonged delays. American search engine giant Google took over a year to get clearance from security institutions to open its liaison office in Pakistan. 

Afzal said the prime minister would be presiding over a monthly meeting of the council to review its performance and issue further guidelines. “The forum will not only help GCC investors, but also private investors and other countries interested in investing in Pakistan," he said. 

Economic expert Uzair Younus, however, remained skeptical of the SIFC's success in attracting investments worth billions of dollars.

“This is an old wine in a new bottle,” Younus, director of the Pakistan Initiative at Atlantic Council’s South Asia Centre, told Arab News. “Such attempts have yielded suboptimal results in the past and won’t work in the future.” 

“The SBP [State Bank of Pakistan] data shows us that $61.5 billion flowed in FDI [Foreign Direct Investment] to Pakistan over the last 20 years," he added. 

Abid Qaiyum Suleri, a former economic adviser to the government, said the SIFC would help improve the implementation mechanism on foreign investors' commitments and investment plans.  

“The SIFC will help ensure consistency and continuity in investment policies, and it is a positive development that both top civil and military leadership are committing to it,” Suleri added.