Daily Times

Mohammad Bin Salman has landed in Islamabad. There are many in this country — and the Pakistani government in particular — who have pinned their hopes on him. As the crown prince of Saudi Arabia visits Pakistan, our foreign exchange reserves stand at just $8.2 billion, an amount that covers less than two months of imports, and that too after already having received $2 billion from Saudi Arabia and the United Arab Emirates this January. Nonetheless, for now Islamabad finds that the only viable option is to subsist on bailouts from our old allies while negotiating a deal with the International Monetary Fund. Reports emerged last week that Pakistan and the IMF are looking to ink an agreement to a three-year financial programme by the coming June. However, this would come with strict conditions on Rupee value and revenue collection which would burden average citizens.

In this bleak scenario, MBS emerges with billions in investment — of which $7 billion is to reach Pakistan in the next two years. Memorandums of Understanding are to be signed in a wide variety of sectors including oil refining, liquid natural gas (LNG), renewable energy and mineral development. The agenda includes the establishment of an Aramco oil refinery in Gwadar and Saudi Arabia’s purchase of two LNG-based power plants that the government has been looking to sell as part of a privatisation drive. $4 billion in investment is also expected in deals on developing alternate energy power plants. These are not insignificant developments. Given that Pakistan imports 69 percent of its oil, the settlement of a new oil refinery would allow the country to save money by importing cheaper crude oil instead of more expensive refined petroleum products. This, plus the investment in alternative energy power plants could help Pakistan diversify its energy model and reduce dependency on imported fossil fuels that devastate the environment.

Increased closeness with MBS could also help Pakistan’s financially without direct investment. Pakistani expatriates in Saudi Arabia are one of the country’s biggest sources of foreign exchange. However, since the past few years Riyadh has been looking to reduce its dependence on imported labour. As a result, remittances coming into Pakistan from Saudi Arabia have declined. Therefore, Prime Minister Imran Khan and Foreign Minister Shah Mehmood Qureshi must initiate negotiations regarding Pakistani labour in Saudi Arabia. These negotiations must also be comprehensive, meaning that the poor living condition of labourers employed by Saudi employers must also be discussed, and the Kingdom urged to follow global standards laid out by bodies like the International Labour Organisation. *

Published in Daily Times, February 18^th 2019.