Saudi Arabia has recently been making headlines for all of the wrong reasons. While the $10 billion investment agreement that will see Riyadh join the Belt and Road initiative by building a new oil refinery in Pakistan’s Gwadar port city, this story has generally be buried beneath those discussing the murder of Saudi born journalist Jamal Khashoggi at the Saudi consulate in Istanbul. But while for nations with the economic luxury of investigating the Khashoggi matter, business might not proceed with Riyadh as usual, for Pakistan, there is a crisis at hand that effects not the family of a single slain man but the lives of over 200 million Pakistanis.
Decades of domestic mismanagement in respect of the Pakistani economy appears to have forced Islamabad back to the International Monetary Fund (IMF) for a new bailout to stop Pakistan’s current account deficit from causing a major economic crisis. While Prime Minister Imran Khan recently stated that he will approach three nations (which he did not name) prior to approaching the IMF, further statements from Pakistan’s government indicate that a new IMF bailout may be inevitable. That being said, Pakistan has yet to formally make the request to the IMF.
The risk of Pakistan not being able to pay back its debts due to the domestic current accounts deficit has led Imran Khan to suggest that a possible hybrid solution involving a smaller IMF loan in combination with loan agreements with sovereign partners may be the best way forward. It is against this background that Imran met with top Saudi officials including King Salman in Riyadh where he is attending the Future Investment Initiative (FII) conference, sometimes called the “Davos in the desert”.
وزیر اعظم پاکستان عمران خان اور اُنکے وفد کی سعودی فرمانروا شاہ سلمان بن عبدالعزیز سے اہم ملاقات ،ملاقات میں پاکستان کی جانب سے وزیر خارجہ شاہ محمود قریشی ،وزیر خزانہ اسد عمر،وزیر اطلاعات و نشریات فواد چوہدری اور رزاق داؤد موجود تھے۔#PMIK pic.twitter.com/Sji83D1p5J
— PTI (@PTIofficial) October 23, 2018
During a lengthy interview before attendees of the FII conference, Imran Khan spoke candidly about the pressing matter of a monetary injection either from an cooperative partner nation, the IMF of both. He also laid bear the reality that economic reforms implemented today might not achieve their full desired goal for months or even a year. That being said, Imran balanced this honest and frank assessment against his medium and long term goal to rejuvenate Pakistan’s founding mission as articulated by national father Muhammad Ali Jinnah who sought to built a state where the welfare of all citizens was collectively assured through progressive measures designed to enhance social harmony.
Turning to his nation’s relationship with China, the Pakistani Prime Minister stated that as a country that was able to lift 700 million people out of poverty in thirty years, China is naturally an inspiration for Pakistan as Imran looks to elevate the condition of his people in the most rapid fashion possible. Iman Khan went on to speak of the great economic potential of the China-Pakistan Economic Corridor and in particular the Gwadar port. He then invited members of the international business community to invest in the special economic zones that are being built at Gwadar while drawing a helpful comparison to Gwadar’s deep water port to that of Singapore. Imran Khan then reflected on the modern housing programme his government has just inaugurated.
In addition to explaining to his audience of Saudi and international investors that Pakistan is a resource rich country ripe for forward looking foreign direct investment, the Prime Minister further explained how years of a war on terror which saw extremists enter into Pakistan from the Afghan side of the Durand Line made many international investors concerned with the safety of investments in Pakistan. While Pakistan has largely won its own war on terror thanks to the professionalism of the security services that Imran paid tribute to, this fact remains scarcely reported outside of Pakistan. Therefore it was of supreme importance that Imran explained that while Pakistan’s economy is current going through a difficult period, that this is partly do to the supreme sacrifices that Pakistan made to rid itself of the plague of terrorist extremism. In this sense, Pakistan today is not only a sound investment but in a literal sense it is also a safe one.
In making the point that whilst Pakistan was one of the fastest growing economies in Asia during the 1960s but that subsequent decades of poor governance meant that the country “lost its way”, today under his government, Imran Khan looks to restore balance to society while attracting unprecedented levels of foreign direct investment.
Iman Khan’s statement was focused, honest and deeply informed. For the first time in decades, Pakistan has a highly articulate Prime Minister who is willing and able to act as an economic ambassador whose mission is to secure the best possible future for his fellow Pakistanis. The long term future is of course a bright one as CPEC and related projects will doubtless flourish in future years and decades. Therefore, Pakistan’s challenge in the immediate term is to secure credit lines with reliable and trustworthy partners who can help Islamabad to get over the current obstacles erected by a combination of poor governance from recent decades and a nationally exhausting war against extremism that was won at a great price to society.
By focusing on Pakistan and its relations with its traditional partners including China and his Saudi Arabian hosts, Imran Khan has not fallen victim to vainglorious temptations that were so attractive to many of his predecessors. Rather than speak as though he was more concerned with remote issues than those facing his people, Iman Khan spoke about what Pakistan needs, wants and can offer. This is mature statesmanship that offers the best possible solution to the present current accounts deficit issue.
While much of the world, including and especially Europe tries to exploit the tragedy of others for its own gain, Pakistan’s new Prime Minsiter has demonstrated calm, decisive and honest leadership at a time when anything else could harm Pakistan’s fortunes greatly. While some domestic opponents continue to argue among themselves, Imran Khan is making the case for Pakistan’s future to those who are in a position to extend a helping hand on a win-win basis. This is the difference between decades of failure and the potential of Naya Pakistan (New Pakistan).
As a result of Imran Khan’s discussions with the Saudi King and Crown Prince, Riyadh has agreed to loan Pakistan $3 billion as part of a year long credit agreement. Additionally, Saudi Arabia will allow Pakistan to defer payments for oil imports up to the amount of an additional $3 billion in an agreement set to last for one year. With Imran Khan soon to visit China, there is now hope that Pakistan can help to cut its deficit through a series of loans from friendly nations.