Saudi Arabia and Pakistan signed investments deals in energy and agriculture sector including setting up a $10bn oil refinery in southwestern city of Gwadar
Saudi Arabia’s Crown Prince Mohammed bin Salman said his country signed so-called memorandums of understanding worth $20 billion of investment in Pakistan.
“We are creating a great future for Saudi Arabia and Pakistan,” Prince Mohammed said at a reception by Prime Minister Imran Khan after the kingdom’s de facto ruler reached Islamabad on Sunday on a two-day trip.
The two nations signed investments deals in energy and agriculture sector including setting up a $10 billion oil refinery in southwestern city of Gwadar.
Prince Mohammed’s investment plans may help premier Khan’s efforts to revive an economy hurt by widening current account and fiscal deficits.
Saudi Arabia has already given a $3 billion loan to Pakistan, while the United Arab Emirates provided $1 billion as part of its $3 billion balance of payment support that helped south Asia’s second biggest economy avert a financial crisis.
The Saudi support comes as Pakistan has stalled in its negotiations with the International Monetary Fund over proposed reforms, though Finance Minister Asad Umar said this month the nation is close to signing a bailout package to help ease its balance-of-payments crisis and boost dwindling foreign reserves.
The Saudi “investment and infrastructure projects should provide a welcome supply-side boost” to the economy, said Bilal Khan, a senior economist at Standard Chartered Plc in Dubai.
However, “addressing the country’s twin deficits will require fiscal and monetary policy action, likely under an IMF program.”