ISLAMABAD: The International Monetary Fund has called on Pakistan’s new government to act fast to stabilize its teetering economy, warning growth will likely slow and inflation rise, but made no mention of a new bailout deal.
Former cricketer Imran Khan’s new administration had vowed to decide by the end of September if it would seek an IMF bailout to shore up the economy as it faces a balance-of-payments crisis and dwindling reserves.
However, it has yet to announce a deal as it seeks other arenas of financing and launched a highly publicized austerity drive that has included auctioning off government-owned luxury automobiles and buffaloes.
The IMF said in a statement released late Thursday that Pakistan was in need of significant external financing in the near term and recommended upping gas and power tariffs while also pushing for exchange rate “flexibility” and monetary policy tightening.
“These steps would help reduce current account pressures and improve debt sustainability,” said the fund in a statement.
But it warned that tough days may lay ahead as higher oil prices and tightening financial conditions for emerging markets will likely add to Pakistan’s economic woes.
“In this environment, economic growth will likely slow significantly, and inflation will rise,” said the IMF.
Pakistan has gone to the IMF repeatedly since the late 1980s. The last time was in 2013, when Islamabad got a $6.6 billion loan to tackle a similar crisis.
For months analysts have warned Khan’s new government must act quickly to stem a new current account crisis, which could undermine its currency and its ability to repay billions in debts or purchase imports.
The US, one of the IMF’s biggest donors, has raised fears Pakistan could use any bailout money to repay mounting loans from China, sparking criticism from Islamabad.
Pakistan’s budget deficit has climbed steadily over the past five years, and foreign currency reserves have declined. The rupee has been repeatedly devalued in the past year, fueling inflation.
Khan has vowed to improve trade with India, increase the ease of doing business and boost tax collection but since taking office in August is yet to roll out a comprehensive plan aimed at tackling the country’s economic fortunes.
The state of Pakistan’s finances could also undermine one of Khan’s most popular promises to construct an “Islamic welfare state” based on increased spending on education and health.
The IMF’s warnings come days after the Asian Development Bank said Pakistan’s economy could shrink by one percent in the current fiscal year.
IMF calls for more action in Pakistan, but no word on bailout
IMF calls for more action in Pakistan, but no word on bailout
- Pakistan has gone to the IMF repeatedly since the late 1980s
- The last time was in 2013, when Islamabad got a $6.6 billion loan to tackle a similar crisis
Saudi investment hits 32% of GDP, non-oil fixed capital reaches 40%, minister says
RIYADH: Saudi Arabia’s investment now accounts for 32 percent of gross domestic product, with non-oil fixed capital at 40 percent, according to the minister responsible for portfolio.
Speaking during his visit to the Shoura Council, Khalid Al-Falih said that foreign direct investment is expected to grow fivefold, signaling strong Vision 2030 progress.
“Regarding cumulative performance, the Kingdom has exceeded all expectations, achieving high levels of investment,” Al-Falih said, according to a video posted on Al-Ekhbariya’s X account focused on economic matters.
The minister added: “Today, investment accounts for 32 percent of the total GDP. In terms of non-oil GDP, fixed capital represents 40 percent, compared with 41 percent in China, the highest globally.”
If we take the non-oil GDP, he said, fixed capital will make 40 percent. “China is the largest globally with 41 percent. So, we will rank second if we compare it to the non-oil economy and fourth when measured against total GDP,” Al-Falih said.
He emphasized that the Kingdom offers an investment-attractive environment, noting that when focusing on foreign direct investment rather than overall investment, Saudi Arabia ranks among the world’s highest.
The minister of investment added that FDI is expected to grow fivefold by the end of 2025, though these data require confirmation, stressing that this is “a big indicator for the success of Saudi Vision 2030.”
During his address to the session, Al-Falih emphasized that Saudi Vision 2030 prioritizes economic diversification and reducing dependence on oil, through boosting the private sector’s contribution to inclusive economic development, supporting national sectoral priorities, and driving growth in the Kingdom’s GDP.
He highlighted key initiatives enabling the private sector, including the establishment of the Ministry of Investment and the Saudi Investment Promotion Authority, the launch of the “Shareek” program, the development of the National Investment Strategy, and linking all stakeholders in the investment ecosystem.
“The Cabinet’s adoption of the National Investment Strategy, launched by Crown Prince in 2021 and implemented in 2022 as a comprehensive national framework, has played a major role in positioning investment as a driver of economic growth,” he said.
Al-Falih revealed that the ministry has identified more than 2,000 investment opportunities worth over SR1 trillion ($267 billion), noting that 346 of these opportunities have been converted into closed deals valued at over SR231 billion through the “Invest Saudi” platform.
He also highlighted the success of the regional headquarters attraction program, with licenses issued to more than 700 global companies by the end of 2025, surpassing the 2030 target of 500 companies, across diverse sectors that reinforce Saudi Arabia’s role as a regional business hub.
The minister revealed that active investment licenses have grown tenfold, rising from 6,000 in 2019 to 62,000 by the end of 2025, highlighting the role of companies in creating over one million jobs, including numerous positions for Saudi nationals.
Al-Falih noted the Kingdom’s success in attracting 20 of the world’s top 30 banks, as part of efforts to strengthen the presence of leading asset managers and international banks in support of the Saudi banking sector.
He also discussed reforms to enhance the business environment, such as the Civil Transactions Law, Companies Law, and the updated Investment Law issued in mid-2024, which contributed to Saudi Arabia moving up 15 places in the global competitiveness ranking.
The minister also announced the update of the National Investment Strategy in 2025, focusing on quality, productivity, and directing investments toward sectors with the highest economic impact, while developing financing solutions for SMEs.
