ISLAMABAD: Saudi Arabia is in talks with the World Bank and other financial institutions to come up with “more creative” ways to provide financial support to Pakistan, Saudi Minister of Finance Mohammed Al-Jadaan said this week.
The finance minister’s statement coincides with his remarks at Davos on Wednesday where he said the kingdom would change the way it provides assistance to allies, shifting from previously giving direct grants and deposits unconditionally and encouraging countries it supports to enact economic reforms.
Pakistan is currently facing a severe foreign exchange crisis, with State Bank reserves falling to a critical level of $4.3 billion.
As the specter of default looms large, Prime Minister Shehbaz Sharif’s administration has been desperately seeking external financing, particularly a loan tranche from the International Monetary Fund (IMF) which has been pending since September last year. Pakistan is also looking at “friendly” nations like Saudi Arabia and the UAE to bail it out.
In an interview to Bloomberg this week, Al-Jadaan said Saudi Arabia was working with multilateral institutions to provide support to Pakistan, Turkiye and Egypt as part of the kingdom’s largesse to nations it deems “vulnerable.”
“We are investing heavily in these countries and will continue to look for opportunities to invest,” he said. “It’s very important to bring stability.”
The kingdom was also discussing with the World Bank and other institutions how it could be “more creative” in providing support to Pakistan.
Al-Jadaan said Saudi Arabia was looking to invest $10 billion in Pakistan and had already extended the term of a $3 billion deposit to boost its foreign-currency reserves late last year. Saudi Arabia was now exploring the possibility of increasing the amount, he added.
“We are providing even oil and derivatives to support their energy needs,” Al Jadaan said. “So there is a lot of effort.”
During a panel discussion at the World Economic Forum in Davos on Wednesday, Al-Jadaan said the kingdom wanted to move away from its previous policy of giving nations direct grants and deposits “without strings attached.”
“We are working with multilateral institutions to actually say we need to see reforms,” Al-Jadaan said. “We are taxing our people, we are expecting also others to do the same, to do their efforts. We want to help but we want you also to do your part.”
Saudi Arabia and other Gulf Arab states like the United Arab Emirates and Qatar have increasingly moved toward investing rather than extending direct financial aid.
