DUBAI: In a significant development, the United Arab Emirates (UAE) has allocated $10 billion for investment in Pakistan, according to a statement from the Prime Minister’s Office on Thursday.
The announcement followed a meeting between Prime Minister Shehbaz Sharif and UAE President Sheikh Mohamed bin Zayed Al Nahyan in Abu Dhabi, where the prime minister was on a day-long visit.
The UAE’s WAM news agency reported that the decision aims “to strengthen the Pakistani economy, support it, and enhance cooperation between the two countries.”
Pakistan is actively seeking investment from allied nations to bolster its economy. The Pakistan Muslim League-Nawaz (PML-N) government is exploring various avenues to increase reserves and reduce high inflation.
In addition to the UAE’s commitment, Saudi Arabia has also pledged to expedite $5 billion in investments. Last month, the Saudi foreign minister indicated that Riyadh is prepared to “move ahead significantly” with investment projects in Pakistan.
During his first visit as the elected prime minister, Shehbaz Sharif emphasized the importance of collaboration with friendly nations, declaring an end to seeking aid with “begging bowls.”
“Gone are the days that I will go to our brotherly countries with a begging bowl. I have broken that bowl,” he asserted.
As of May 17, Pakistan’s total foreign exchange reserves are at a stable $14.5 billion, with the State Bank of Pakistan holding $9.15 billion after a slight increase.
Last month, Pakistan completed a short-term $3 billion program that helped prevent a sovereign default. However, Prime Minister Shehbaz’s government is pushing for a new, longer-term program.
The $350 billion economy has stabilized post the IMF program completion, with inflation dropping to around 17% in April from a record high of 38% last May. Despite this, Pakistan continues to face a high fiscal deficit. Measures to control the external account deficit through import restrictions have led to stagnating growth, which is expected to be around 2% this year compared to negative growth last year.
Pakistan is seeking at least $6 billion and additional financing from the IMF under the Resilience and Sustainability Trust. However, the IMF has indicated that a new bailout package under the Extended Fund Facility (EFF) will only be considered after Pakistan presents an aligned budget and secures its approval from parliament, according to reports.
