By Professor Sajjad Qamar
Pakistan looks towards Saudi Arabia once again for a vital financial assistance to secure the International Monetary Fund’s (IMF) fresh loan program to stave off a balance of payments crisis. Prime Minister Shehbaz Sharif-led coalition government has requested the Kingdom to enhance its lending by about $1.2 billion from the existing $5 billion portfolio to help bridge the external financing gap.
As the adage goes, ‘a friend in need is a friend indeed,’ Saudi Arabia has always responded positively to all Pakistan’s requirements including financial and diplomatic at all levels.
Islamabad is now looking towards three friendly partners – Saudi Arabia, UAE and China – for a $12 billion loan rollovers to secure the IMF loan. The reprofiling or rollover of this $12 billion is a prerequisite set by the IMF under the $7 billion Extended Fund Facility.
Pakistan has now requested an additional $1.2bn from Riyadh, which is expected to come in the form of a bilateral commercial loan, though it could also be in the form of a safe deposit. The government officials here claim the Saudi Finance Minister Mohammed Al-Jadaan recently assured his counterpart of the additional support, but it has yet to materialise.
The good news to some extent for Pakistan is that Saudi Arabia’s cabinet has recently authorised one of his representatives of General Audit Bureau to engage Pakistan to work out a memorandum of understanding (MoU) on accounting, supervisory and other profession financial matters. It is significant mainly because it shows the intent of the Kingdom that it wants more investment in Pakistan.
Both the countries have long been enjoying brotherly and friendly relations. Few might know that when Saudi state came into being on world’s map, Maulana Sanaullah Amratsari led delegation on behalf of Indian Muslims had paid a visit to the Kingdom with cash, jewellery and other stuff to provide financial assistance to a new state. These gifts were presented to the founder of the Kingdom. Saudi Arabia responded with unbound affection and assistance and love. This economic and religious relationship continues smoothly.
Since the commencement of its formal diplomatic relations with the Kingdom in 1951, the Kingdom has extended significance assistance to Pakistan during 80’s then late 90’s when the nation become a nuclear state and faced sanctions and isolation at international level.
At that critical point, Saudi Arabia had provided oil on deferred payments to Islamabad for five years.
Then in 2008, during the time of international financial crunch, Saudi Arabia had deposited cash in Pakistan’s central bank and again gave facility of deferred oil supply. In the years of 2014-15 amidst the surge of oil prices, the Kingdom again came to the rescue of its friendly country and gave $1.5 billion in assistance. Saudi Arabia has entertained Pakistan’s requests multiple times to rollover its cash deposits in Pakistan’s accounts.
Now, the approach of Saudi authorities towards Pakistan remain a bit changed. As a brotherly country, Saudi Arabia wants to see Pakistan as a stable state. Islamabad is now expected to share some tangible evidence and data with the Saudi authorities to confirm that it is on the recovery path. Saudi officials and investors now want to engage with Pakistan on long term projects.
Saudi ambassador in Pakistan, whom I refer as Pakistan’s ambassador, is personally struggling to ensure such engagements and he is optimistic that both the states will chalk out detailed investment plan including construction of an oil refinery worth $10 billion in Gwadar. Saudi ambassador in Pakistan Naufal Al Maliki has recently facilitated visits of Saudi investors to Pakistan.
Realising an urgent need for reforms to attract Saudi investment in Pakistan, the government has initiated numerous measures to improve the governance and facilitate businessmen through one-window operations. Different teams in the Prime Minister Office in Islamabad have been working day and night to remove hurdles in the investment and explore potential and viable areas for the investors.
We are sure Pakistan and Saudi Arabia will be entering a new era of mutual investments and a sustainable development soon, leaving behind a legacy of loans and financial assistance to cover Islamabad’s chronic balance of payments needs. Top government officials here believe numerous projects and sectors including energy, IT and agriculture will be ready for Saudi investment before the expected visit of the Crown Prince Mohammed bin Salman.
