Saudi Arabia is to invest $25 billion in Pakistan over the next two to five years, according to caretaker Prime Minister Anwaar ul Haq Kakar’s announcement on Monday.
During a press conference, Prime Minister Kakar outlined the country’s plans to spend heavily on the mining, agricultural, and IT industries. Pakistan is having financial difficulties, thus this plan is an attempt to attract more FDI.
This would be Saudi Arabia’s greatest investment in Pakistan if it goes through. During the current fiscal year, the country has an urgent need for finances to deal with its trade imbalance and repay its international loans.
The conference did not reveal the exact projects that the Saudis planned to engage in, but last month Barrick Gold Corp indicated interest in working with the Saudi Arabian wealth fund on the Reko Diq mine in Pakistan.
Kakar stressed the importance of Pakistan’s vast undeveloped mineral resources, estimating their value at a conservative $6 trillion. Also, during the next six months, the administration plans to speed through two privatization agreements, both of which will include state-owned firms in the power sector. The government also intends to sell off another business, ideally one unrelated to the energy industry.
The sale of state assets is a politically delicate matter, hence prior elected governments in Pakistan have often avoided it. This has hampered privatization initiatives in the past.
Under a caretaker administration, Pakistan is attempting to recover economically after the International Monetary Fund approved a $3 billion loan plan in July, averting a sovereign debt default. Due to its widening trade deficit and mounting debt, Islamabad is facing a balance of payments crisis and needs immediate access to considerable funds.
