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Pakistan
This Week in AsiaEconomics

As cash-strapped Pakistan seeks to ease its China reliance, Saudi, UAE pledge billions

  • Investment pledges from Abu Dhabi and Riyadh give Islamabad financial breathing room amid new bailout talks with the International Monetary Fund
  • Analysts say Pakistan should seize the opportunity, stick to reforms and improve security to widen its investment base beyond close ally China

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A family in Lahore rides past a mural showing the national flags of China and Pakistan. Analysts say it’s in “Pakistan’s utmost interests” to expand its investor base and financial cushions “beyond China and the IMF”. Photo: AFP
Tom Hussain
The United Arab Emirates and Saudi Arabia have pledged to plough billions of dollars into Pakistan’s ailing economy as the Arab hierarchies “assertively expand” their influence in the region and Islamabad seeks to lessen its overreliance on Chinese funding.
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Pakistani Prime Minister Shehbaz Sharif secured US$10 billion in investments from UAE President Mohammed bin Zayed Al Nahyan during a meeting in Abu Dhabi last week.

The UAE’s deal follows China’s push on May 15 to revive investments in Pakistan under the Belt and Road Initiative, while Saudi Arabia last month said it would fast-track US$5 billion of investments in the South Asian nation as part of an estimated US$25 billion programme.

“For cash-strapped Pakistan, the commitment of the UAE and Saudi Arabia to invest in its economy comes as a welcome relief, particularly amid ongoing negotiations with the International Monetary Fund for a new bailout package,” said Farwa Aamer, director of South Asia Initiatives at the Asia Society Policy Institute in New York.

Since assuming office in early March after a controversial general election, Shehbaz’s government “proactively pursued high-level engagements” with wealthy Gulf monarchies, notably Saudi Arabia and the UAE, “with a focus on fostering robust collaborations and investments across pivotal sectors”, Aamer said.

Pakistani Prime Minister Shehbaz Sharif (left) with Saudi Crown Prince Mohammed bin Salman in Riyadh last month. Photo: SPA/dpa
Pakistani Prime Minister Shehbaz Sharif (left) with Saudi Crown Prince Mohammed bin Salman in Riyadh last month. Photo: SPA/dpa
She added the strategic alignment “mirrors broader regional trends, where Gulf powers are assertively expanding their influence”, as evidenced by recent overtures towards India.
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