Islamabad: In light of Riyadh's plans to consider a significant funding infusion into the South Asian country's beleaguered economy, experts and business leaders told Arab News that the prospect of expanding Saudi investment would be a relief for Pakistan.
Crown Prince Mohammed bin Salman earlier this week instructed officials and the Saudi Fund for Development to see if the kingdom's investment could be increased to $10 billion and deposits in the Pakistani central bank to $5 billion. is because Pakistan's foreign exchange reserves continue to be under. pressure to repay the loan.
Pakistan has recently turned to Saudi Arabia to help overcome problems caused by lack of reserves and maturing debt. While other nations asked for their deposits back after maturity, the SFD deposited $3 billion in the State Bank of Pakistan in 2021, and remained in the Saudi fund system until 2022 when Islamabad asked for a repayment extension.
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Prime Minister Shahbaz Sharif echoed the sentiments of Pakistan's business community when he said on Wednesday that Pakistan was "extremely grateful" for the choice of the crown prince.
Former Islamabad Chamber of Commerce leader Sardar Yasir Ilyas Khan said, "The directives have been highly appreciated by the entire Pakistani people. This news is a breath of fresh air for all of us in the current climate of political and economic uncertainty." and industry, for Arab news.
There is a lot of opportunity, and Saudi Arabia has a significant advantage because of its experience in this area and because it is home to the world's largest sovereign wealth fund.
Due to a standoff over tax targets with the International Monetary Fund, another tranche of Pakistan's bailout program was not delivered on time, leaving the country cash-strapped.
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The situation worsened when the country experienced its worst floods in decades between July and October, which halved its economic growth.
According to Khaqan Najeeb, a former advisor to the finance ministry, pumping money into central bank reserves could help address Pakistan's severe dollar liquidity crunch. A huge amount of foreign investment was also required.
As the Saudis have said that they are willing to consider investment of up to $10 billion in Pakistan, according to Najib, there is a need to start talks with them immediately.
"Pakistan is a country that is hungry for FDI" (Foreign Direct Investment). Over the years, our FDI has come down to below the $2 billion mark, which is insufficient for a country like Pakistan. Our FDI has halved in the last few months of this FY2023 as compared to the same period a year ago.
However, the Pakistani government should do its research to make investments from the Kingdom sustainable and entice participants in the private sector.
With the Kingdom expressing interest in Pakistan's industry and refining, economist Ali Salman stressed the need for legislative incentives to spur development of projects involving Saudi companies.
"We hope that the Pakistani government will develop a supportive oil refinery policy, which will attract Saudi investment," he said. Businessmen are optimistic that the country's financial situation will soon improve with the Saudi aid.
According to Khurshid Barlas, chairman of the regional coordination committee at the Rawalpindi Chamber of Commerce and Industry, "I am hopeful that the situation will start to return to normalcy within three to four months in the near future." "We hope that Pakistan will emerge from this economic crisis as a result of this support."