Pakistan after being hit by the worst floods in its history, to receive relief in the form of assistance and investments from Saudi Arabia after Crown Prince Mohammad bin Salman’s order.
The investments are said to be done after conducting studies Exploring viable strategy. According to state-run Saudi Press Agency there is a will to increase deposits from $3 billion to $5 billion in Pakistan’s central bank and also asses ways to increase investments in Pakistan to $10 billion.
The Saudi fund for development provides soft loans and grants to developing countries as a way to strengthen their ties and cement their bilateral relationship. The order from the Saudi Prince comes just after a day when he met with Pakistan’s army chief General Syed Asim Munir to review ways to strengthen cooperation between the two nations.
Pakistan is currently suffering through a liquidity crisis due to its economic mismanagement. The foreign exchange reserves stooped to $5.6 billion, lowest in nine years. This sum was just enough to last one month of imports. Amidst this financial crisis Pakistan was hit by devastating floods adding to its troubles.
“The investment would be in setting up a refinery in Pakistan, for which the government needs to complete modalities including finalization of refinery policy.” Said Tahir Abbas, head of research at Karachi-based Arif Habib Ltd. The investments from Saudi Arabia however are subject to resumption of the IMF program, he further added.
Pakistan would surely get a sigh of relief if it’s able to receive new investments from Saudi Arabia but it would not be enough. It is also exploring ways to seek extension for 30% of its foreign debt that is owed to China. Especially for the $2.1 billion from China that is due in March.