Riyadh — Mubasher: Saudi Arabia has prepared an investment package for Pakistan in a bid to support its cash-strapped Muslim ally, along with addressing regional geopolitical challenges, analysts said.
These investments capped by a $10 billion refinery and oil complex in the strategic Gwadar Port on the Arabian Sea, French news agency Agence France-Presse (AFP) reported.
Saudi crown prince Mohammed Bin Salman, the architect of reform proposals intended to wean the kingdom’s economy off its dependence on oil revenue and state welfare, will visit Pakistan in the near future, two Saudi sources told AFP, without setting a date.
A raft of key investment agreements are projected to be signed during the high-profile visit, officials from the countries added.
The two decades-old allies have been involved in months-long talks to finalise the deals that will be penned during the highly anticipated visit.
“The outcome of the talks so far has been very positive and this is going to be one of the biggest-ever Saudi investments in Pakistan,” a Pakistani senior finance ministry official told AFP.
Saudi Arabia and its ally the UAE offered Pakistan more than $30 billion in loans and investments, Pakistani and Saudi officials said in January.
The funds would allow Pakistan’s Premier Imran Khan, who took office in July 2018, to delay the painful prospect of borrowing from the International Monetary Fund (IMF).
Saudi investments are to provide a lifeline for Pakistan’s dropping economy downgraded in early February by credit rating agency Standard & Poor's from a B to a B-, Saudi economist Fadhl al-Bouenain told AFP.
“Saudi investment to Pakistan comes within an economic aid package aimed at relieving the stress of external debt and a shortage of foreign currency, besides boosting the sluggish economy,” Bouenain added.
The kingdom, the Organization of Petroleum Exporting Countries’ (OPEC) kingpin nation, aims to achieve strategic and commercial goals with investments in infrastructure and refinery projects, he said.
Saudi Arabia and the UAE, have already deposited $3 billion each in Pakistan’s central bank in an effort to help resolve a balance of payments crisis and support the South Asian nation's declining rupee.
Abu Dhabi Fund for Development (ADFD) last month announced plans to deposit $3 billion into Pakistan’s central bank to support the South Asian country’s cash-strapped government.
The Middle East’s two biggest economies have also reportedly postponed some $6 billion in oil imports payments as Pakistan has so far failed to secure fresh loans from the IMF.
Through its petrochemical investments in Pakistan, Saudi Arabia, the world’s largest oil producer, aims to secure long-term buyers of its oil.
A pipeline from Gwadar Port on the Arabian Sea, the ultimate destination for the massive multi-billion dollar China Pakistan Economic Corridor, to China would reduce the supply time from the current 40 days to only seven, experts say.
“Pakistan needs a rich partner to enter as a third party besides China, capable of injecting needed cash,” Bouenain said.
