Saudi Arabia considers increasing its investment in Pakistan to $10 billion.

 Saudi Arabia considers increasing its investment in Pakistan to $10 billion.

 

The Saudi state news agency claimed on Tuesday that Saudi Arabia stated it might raise the amount of money invested in Pakistan's economy to $10 billion and raise the $5 billion deposit cap on the State Bank of Pakistan (SBP) by $2 billion. According to a statement from Crown Prince Mohammed bin Salman, a study has been ordered to expand Saudi Arabian investments from the initial $1 billion promised in August to $10 billion.

 

In order to strengthen existing alliances and forge new ones, he has also requested that the Saudi Development Fund (SDF), which offers grants and soft loans to developing nations, consider lifting the ceiling for Saudi deposits into the SBP. The Saudis extended the conditions of the $3 billion SBP deposit they made in 2021 last month. The announcement on Tuesday follows a meeting between the crown prince and Army Chief Gen Syed Asim Munir to discuss ways to improve bilateral relations and foster collaboration.

 

At a summit in Geneva co-hosted by the UN and Islamabad, international donors pledged nearly $9 billion, including $1 billion from Saudi Arabia, to aid Pakistan in recovering from last year's devastating floods. This exceeded Pakistan's external finance goals. The aim of Saudi Arabia to increase investments, according to analysts, may be a favorable chance, but they maintained that Pakistan needed rapid dollar inflows to support its foreign exchange reserves and lower the danger of default.

 

According to Samiullah Tariq, the head of research at Pak-Kuwait Investment Company, the Saudis' plan to invest $10 billion could be an excellent opportunity to offer Pakistani investors investment alternatives. "Inviting the Saudis to invest in a new refinery would be beneficial in the long run. "Saudis would find it simple to invest, which is beneficial for the country," he remarked.

 

He claimed that privatizing businesses might be another way to attract Saudi capital, which might make some high-value enterprises financially viable with this investment rather than continuing to run deficits for years. He claimed that adding an additional $2 billion to the SBP's account would help the nation with its immediate needs and enable it to continue fulfilling its important foreign payment obligations. The SBP's holdings have decreased to $5.6 billion, the lowest level in nine years and just enough to fund less than one month's worth of imports. Downgrades were prompted by the weakening economic outlook, which compelled the government to declare austerity measures to lower energy costs and save money.

 

Mohammad Sohail, CEO of brokerage firm Topline Securities, commented on Saudi Arabia's $10 billion investment by saying that it all hinged on when it was made because Pakistan needed dollars right away to lessen the danger of debt repayment and calm the escalating concern. The economy is in a precarious position since massive inflows are needed according to Tahir Abbas, the head of research at Arif Habib Ltd., the $10 billion investment will be made in the refinery industry because the kingdom had previously stated plans to build a deep conversion refinery in Pakistan.

 

He added that the government should finalize the project's modalities, including the eagerly anticipated refinery policy, to expedite the work and preliminaries of the project. "The beginning of the abovementioned project will bring much-needed foreign direct investment in the country," he said. ed to reduce the danger of default. An estimated seven million people would lose their jobs as a result of the ongoing economic crisis, including four million in the textile industry alone, according to associations that represent the value-added textile industry on Monday.

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