Saudi Arabia has refused to provide any more financial packages or aid to Pakistan. This development comes amidst stalemate in negotiations between Pak officials and IMF. Saudi Arabia’s refusal to provide any further bailouts or interest-free loans to Pakistan has left the government in Islamabad in shock and dismay. It has prompted the finance minister to complain that even friendly countries aren’t keen on helping Pakistan out of its economic emergency. Both Saudi Arabia and the IMF are both demanding economic reforms from Pakistan.
Analysts have told Middle East Eye, there is trust deficit between Pak & IMF, while Saudi Arabia is insisting Pak finalise an agreement with IMF first for further aid from the Kingdom. Saudi Arabia has changed its policy and is focussing on reforms in countries previously depending on the Kingdom for loans. Also S. Arabia has reset its relationship with other countries and refuses to give financial handouts without following its conditions.
Analysts have told Middle East Eye that Saudi Arabia has conditioned fresh interest-bearing loans and investment on Pakistan implementing strict monetary and fiscal reforms along with a drastic reduction in its current account deficit – conditions similar to those set by the IMF.
Umar Karim, associate fellow at the King Faisal Center for Research and Islamic Studies was quoted by MEE as saying, Pakistani authorities are in a state of shock.
“While previously Saudi Arabia and other Gulf countries would bail Pakistan out off the back of a phone call from the foreign minister or the prime minister, this time around they are really being put through the mill,” Karim told MEE.
It is reported that on a recent trip, even the Pakistani military chief couldn’t convince Saudi Crown Prince Mohammed bin Salman to release emergency funding for the country.
Karim believes this sets a new precedent. “The Pakistani military chiefs have previously been a source of assurance to friendly countries, but the Saudis have now had enough of Pakistan’s civilian authorities squandering away these handouts,” he said.
At the World Economic Forum in Davos in January, the Saudi finance minister, Mohammed al-Jadaan made the kingdom’s new policy very clear. He said, “We used to give direct grants and deposits without strings attached and we are changing that. We are working with multilateral institutions to actually say we need to see reforms.”
Khaqan Najeeb, former adviser to Pakistan’s finance ministry told the MEE that the Saudis want Pakistan to sign a deal with the IMF and only then will they see any loans or investment.
“The Pakistani government’s delay in implementing essential monetary and fiscal policies, as demanded by the IMF, has hurt the economic situation,” Najeeb said.
Read Also: https://indiadiplomacy.in/pakistans-mounting-imf-woes/
