ISLAMABAD: Pakistan and Turkmenistan agreed on Wednesday to fast-track a major pipeline project that will allow the Central Asian state to supply natural gas to Pakistan and India via Afghanistan, thereby enhancing economic activity across the region and benefiting all involved countries.
The understanding between the two states was reached during a meeting between Federal Minister for Petroleum Dr. Musadik Malik and Turkmenistan’s Foreign Affairs Rasit Meredow who arrived on a two-day visit to Islamabad on Tuesday.
The Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline will originate from Galkynysh, the world’s second-biggest gas field, and end at the Indian city of Fazilka near the Pakistan border.
If the project is implemented, it will help Turkmenistan supply about 33 billion cubic meters (bcm) of natural gas each year along a route covering a distance of over 1,800 kilometers.
According to an official statement released by the Ministry of Energy’s Petroleum Division, Pakistan and Turkmenistan are working to “expedite” the pipeline project.
“TAPI pipeline project will lower energy costs, which can boost industrial growth, create jobs and foster economic development,” it quoted Pakistan’s petroleum minister as saying during the meeting. “Reliable and affordable energy supplies are vital for industrial sectors and overall economic stability.”
“This project, aimed at fostering economic integration and energy security, has witnessed substantial progress through collaborative efforts,” he continued, stressing the importance of continued engagement between the two countries.
Malik added Pakistan was fully committed to the project which was vital for regional energy cooperation and infrastructure development.
The visiting dignitary expressed appreciation for the warm welcome extended to his delegation by the Pakistani authorities.
“Together we will chalk out a roadmap for cooperation between both countries,” he added.
The meeting was also attended by the CEO of TAPI Pipeline Company Limited.
Other participants of the meeting emphasized the project’s strategic importance in enhancing regional connectivity, promoting economic growth and meeting the energy demands of participating nations.
The TAPI project was envisaged in the early 1990s and officially agreed upon in December 2010.
It has primarily been delayed due to security concerns, geopolitical tensions, funding challenges and bureaucratic hurdles.
Pakistan and Turkmenistan agree to fast-track gas pipeline project involving Afghanistan and India
https://arab.news/v4py9
Pakistan and Turkmenistan agree to fast-track gas pipeline project involving Afghanistan and India
- TAPI pipeline project was envisaged in the early 1990s and officially agreed upon in December 2010
- It has been primarily delayed due to security concerns, funding challenges and bureaucratic hurdles
Pakistani economists flag debt sustainability risks as foreign loans surge in FY26
- Pakistan received $2.98 billion from bilateral, global lenders from July to November this year, official data shows
- Economists urge government to take structural reforms to boost exports, cut energy costs, ensure rupee stability
KARACHI: Pakistani economists on Wednesday warned the government against debt sustainability risks as the country’s foreign loan receipts surged to nearly $3 billion in the first five months of the current fiscal year, data from the economic affairs ministry showed.
Pakistan received 16 percent more financing, which is $2.98 billion, from bilateral and multilateral lenders during the July to November period of the current fiscal year compared to last year, the economic affairs’ ministry data showed.
Pakistan, as per the data, seeks to raise $19.8 billion in loans this year through June, which include $16.7 billion non-project and $3.11 billion project loans from multilateral lenders such as the Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), Islamic Development Bank (IsDB), European Union (EU), European Investment Bank (EIB), UNICEF and others.
Pakistan’s bilateral lenders include the countries of China, Saudi Arabia, Kuwait, Oman, the US, Denmark, France, Germany, Italy, Japan and South Korea
“As long as you are utilizing the loan for economic recovery and growth, it is understood,” Sana Tawfik, head of research at the Karachi-based brokerage firm Arif Habib Limited, told Arab News.
“But in the long term, it is not sustainable to rely only on loans. Foreign reserves should be built on FDI [foreign direct investment] and not on loans,” she added.
Pakistan’s finance adviser Khurram Schehzad and finance ministry spokesperson Qamar Sarwar Abbasi did not respond to requests for comment.
Cash-strapped Pakistan came close to a sovereign default in 2023 before a last-gasp financial bailout by the International Monetary Fund (IMF) averted the risk.
While Pakistan has lowered inflation and registered other economic gains, the country’s $15.9 billion foreign reserves mostly come from the IMF in budgetary support and bank deposits from countries such as Saudi Arabia and China.
The cash-strapped country will seek $13.5 billion in budgetary support, $700 million in short-term loans from the IsDB, $1.44 billion as program loans, $1 billion worth of oil on deferred payments and $3.11 billion as project loans by June, the data said.
Prime Minister Shehbaz Sharif’s government also plans to raise $400 million through issuing international bonds, $3.1 billion in loans from foreign commercial banks, $410 million from the IMF, $609 million through Naya Pakistan Certificates (NPCs) and $5 billion as time deposits from Saudi Arabia, and $4 billion as safe deposit from China.
“Long-term solution is not to take loans and this only adds up to the existing external account,” Tawfik said.
She, however, appreciated the government’s ability to reduce its current account deficit in recent months. The economist noted that Pakistan, in the short run, could manage its current account deficit if it remains in the $1.5 billion range throughout the year.
She urged the government to focus on increasing exports, noting its debt servicing requirement was $25.8 billion this year.
Tawfik called for long-term reforms such as reducing the cost of doing business, cutting energy costs, clearing Pakistan’s longstanding power sector debt and keeping the rupee stable to attract increased remittances from Pakistanis working abroad.
“In the long run, we must focus on increasing Pakistan’s exports, remittances, and FDI,” the economist said. “FDI is the most important.”
‘OBVIOUSLY A RISK FACTOR’
However, neither are Pakistan’s exports on the rise nor is FDI. Pakistan’s current account deficit widened by 37 percent to $16 billion from July to November this year. This was due to a 6.4 percent decline in exports to $12.8 billion and a 13 percent hike in imports to $28 billion, data from the Pakistan Bureau of Statistics (PBS) showed.
FDI dropped by more than 25 percent to $927 million during the same period and has never surged beyond $3 billion in nearly 20 years, data from Pakistan’s central bank shows.
“Our debt sustainability will be questioned at any point if we, going forward, are not able to match these debt flows or counter these debt flows with growth and remittances and exports,” Muhammad Saad Ali, head of research at Lucky Investments Ltd, told Arab News.
He noted that debt sustainability is “obviously a risk factor” as Pakistan has not increased its FDI nor exports during the period when its foreign debt has increased.
However, he said that there was a positive side to the 16 percent rise in foreign debt receipts as well, adding that recent macroeconomic improvements have enabled Islamabad to borrow more from global lenders.
But the risks remain.
“You (government) are increasing your debt and your debt sustainability will come into question again if global factors or global environment turn south,” he warned.
