Finance

Pakistan reveals Saudi investment of $25 billion

September 5, 2023

Pakistan's caretaker prime minister Anwaar-ul-Haq Kakar was sworn in last month

Mining, agriculture and IT main beneficiaries
Pakistan has many untapped mineral deposits

Saudi Arabia will invest up to $25 billion over two years in Pakistan, according to a statement from Pakistan’s caretaker prime minister Anwaar-ul-Haq Kakar.

The announcement was made to journalists at Mr Kakar’s residence in Islamabad, citing mining, agriculture and information technology as the main sectors to benefit.

There was no Saudi statement about the report. Pakistan, a key Saudi ally, averted a sovereign debt default in July with a $3 billion loan programme approved by the International Monetary Fund (IMF).

Barrick Gold Corp said in August it was open to bringing in Saudi’s Public Investment Fund (PIF) as a partner in Pakistan’s Reko Diq gold and copper mine, which it jointly owns with the government.

Pakistan is thought to contain billions in untapped mineral deposits.

It was not clear if the investments marked a reversal of the Saudi policy of no more easy bailouts which had Pakistan, Egypt and other key allies in mind – although a rebound in oil prices following the Covid-19 pandemic and the war in Ukraine has refilled Saudi coffers.

“We used to give direct grants and deposits without strings attached and we are changing that,” finance minister Mohammed al-Jadaan told the World Economic Forum in January.

In July the government said it will give Tunisia a $400 million soft loan and $100 million as a grant to help it fix its ailing public finances.

Last November Saudi Arabia agreed to extend the terms of a $5 billion aid package to Egypt intended to complement a $3 billion IMF package. But both the IMF and Saudi Arabia are now talking about a reduction in the military’s sprawling role in the economy.

Riyadh and Abu Dhabi have propped up Egypt with substantial financial aid since the military removed the Muslim Brotherhood from power in 2013 and former defence minister Abdel Fattah al-Sisi became president in 2014.

Al-Sisi held talks with Crown Prince Mohammed bin Salman in Jeddah in April after the currency lost nearly half its value against the dollar since March 2022 when the effects of the Ukraine war began to be felt. No reports of new deals emerged from the meeting.

In March, Saudi Arabia signed a deal with Ankara to deposit $5 billion in the Turkish central bank, as part of a rapprochement after years of cold ties with President Recep Tayyip Erdogan’s government.

Saudi Arabia is also the key underwriter of the internationally recognised government based in Yemen, which controls large parts of the south while the Iran-backed Houthi group controls the north.

It agreed in August to give $1.2 billion in emergency aid after Houthi attacks on southern oil terminals brought energy revenues to a halt.

PIF said last year it would invest $24 billion in Egypt, Iraq, Jordan, Bahrain, Oman and Sudan.

UAE developer Emaar said last month the recent collapse in the value of Egypt’s currency made it a good time to invest in Egypt’s tourism and construction sector.