OUR fact that Qatar announced its intention to invest $3 billion in key commercial and investment sectors of Pakistan economy It has failed to create positive emotions in stock and currency markets of the country shows what’s the last need more than such promises to cheer them up.
Uncertainty over gas-rich Gulf state plans and timing for The promised investments did not help either. it also remains it is not clear whether the pledged investment will made through the sovereign wealth fund of Qatar – Qatar Investment Authority – in in addition to the $2 billion that Doha has pledged to contribute with National Bank help Coast up its falling foreign exchange reserves and meet the demand of Islamabad-IMF deal, or if they overlap.
Qatar’s promise came within weeks of similar promise made The UAE is investing $1 billion. in different sectors in Pakistan.
Investment promise from Doha matched with meeting of The Accounts Committee, which was informed that progress was made already on Saudi Arabia’s proposed plan for 2019 to invest $8 billion in a new refinery in Gwadar giving markets good reason be a skeptic of recent investment commitments by the Persian Gulf. Although Riyadh also announced $1 billion investment plan for Pakistan on Thursday, details are sketchy.
However, the implementation of investments from Qatar, Saudi Arabia and the Emirates plans in wide range of businesses ranging from the hospitality and aviation industries to seaport terminals and LNG fueled. power plants to the sun power will significantly increase the dwindling foreign exchange reserves of the State Bank in nearest term in hard outer environment. But it won’t help solve structural problems faced through economy and the last chronic inability to earn dollars to pay import bills.
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Pakistan currently struggle with one of the most severe economic crises in this is history as he collides with the balance-of-payments problem, which forced Islamabad to turn to multilateral lenders and “friendly” countries like China, Saudi Arabia, UAE and Qatar for dollars to prevent default.
Due to the fall in foreign exchange reserves to below $8 billion or less one and half months of import, Pakistan struggling deal with anxiety current account deficit, one of the world’s fastest growing inflation rate in Russia and a weakening exchange rate rate.
Earlier this week, the State Bank tried to calm markets by saying the country’s external financing needs were limited. more than completely met for in current fiscal, with reserves are likely double up to $16 billion by the end of in financial year.
This may be – temporary – relief, but it has been achieved. with borrowed money. The difficult part is to solve the long-standing structural problems that have plagued economy by increasing domestic productivity and exports, courting private FDI in reduce debtbalance decision-of- Problems with payment and delivery economy on stable and faster growth path.
Published in Dawn, August 26, 2022
