The Qatar Investment Authority (QIA) has announced it aims to spend $3bn on various commercial and investment sectors in Pakistan, which is currently facing a dire economic crisis, according to a statement released by Qatar’s Amiri Diwan.
Wednesday’s announcement was made during a visit to Doha by Pakistani Prime Minister Shehbaz Sharif, who held official talks with Qatari Emir Sheikh Tamim bin Hamad Al Thani after a meeting with the QIA on Tuesday.
“His Highness stressed the importance of the brotherly and strategic relations between the two countries and their aspiration to enhance economic partnership by raising trade exchange and promoting investments through the Qatar Investment Authority,” the Amiri Diwan said in its statement.
A senior Pakistani minister who was present during the meeting confirmed to Al Jazeera that the Qatari government has shown its “intention of investing in Pakistan”.
“This is very good and more than what we needed,” he said. The minister further added that once the Qataris buy Pakistani assets, it will “boost our reserves”.
“They are interested in airports, seaport terminals, LNG-fired power plants, solar energy, [and] shares in the stock markets,” he said.
Pakistan is currently dealing with serious economic turmoil and faces a balance of payments crisis, with foreign reserves having dropped as low as $7.8bn, barely enough for more than a month of imports.
The country is also contending with a widening current account deficit, depreciation of the rupee against the United States dollar and inflation that hit more than 24 percent in July.
During the session, the two heads discussed bilateral relations between Qatar and Pakistan, and ways to support and develop them in “the fields of defence, economy, investment, trade exchange, energy and sports, in addition to discussing the efforts made by the two countries to combat terrorism”, the statement said.
IMF financing in pipeline
The Pakistan representative for the International Monetary Fund (IMF) said last week that the IMF’s executive board would meet on August 29 to decide on resuming a stalled $6bn loan facility for Islamabad.
Last month, the IMF said it had reached a staff-level agreement with Pakistan that would pave the way for disbursement of $1.17bn if approved by the IMF board.
Earlier this week, Pakistan’s central bank also publicly stated that the country’s external financing needs had been “more than fully met” for the current fiscal year, “helping reduce external vulnerability”.
Commenting on the announcement, Uzair Younus, director of the Pakistan Initiative at the Atlantic Council’s South Asia Center, said that while this investment may help alleviate near-term financing concerns for Pakistan, it does not address the central problem facing the country’s economy.
“Pakistan’s core issue is its inability to sustainably finance its own foreign exchange needs,” Younus said. “The Qataris, through these investments, will expect profits that will need to be repatriated in dollars. One must ask whether Qatar will truly be able to recuperate its investments with a profitable return.”
Macroeconomist Ammar H Khan said that the Qatari investment will provide Pakistan with “precious forex liquidity” in a tough environment.
However, he too agreed with Younus, saying the investment will not “alleviate structural problems that plague the country”.
“If QIA is able to improve governance of state-owned enterprises through its investment and enhance value,” Khan said, “then that would be a welcome benefit.”