Pakistan economic crisis continues as IMF bailout not in sight, Saudi Arabia turns cold

Business Thursday 13/April/2023 08:30 AM
Pakistan economic crisis continues as IMF bailout not in sight, Saudi Arabia turns cold

Islamabad: Pakistan's biggest benefactor Saudi Arabia has invited Prime Minister Shehbaz Sharif and his self-exiled elder brother Nawaz to celebrate Eid. This may indicate the reinforcement of close political ties. But economists caution otherwise.

Pakistan's economy is "in a tailspin, moving from crisis to catastrophe", renowned US-based economist Atif Miah has warned as the International Monetary Fund's sorely-awaited bailout is nowhere near sight and Saudi Arabia shows a cold shoulder. They say Saudi under Crown Prince, Prince Mohammed bin Salman, insists that its surplus funds, earned from the recent oil money boom in the last year, are not for "free lunch."

"There is a very slim chance that Pakistan may be able to win Saudi Arabian support for the resumption of its IMF programme, but if it does, this will be a temporary respite," analyst Mosharraf Zaidi wrote in The News International last week.

"Pakistan will not be able to secure any major package of economic support from Saudi Arabia today or in the foreseeable future because the model for such blanket support simply does not exist anymore. Saudi Arabia has changed rapidly and its rulers, whilst maintaining very strong feelings for Pakistan, simply do not have the capacity to continue to allow Pakistani elites (military and civilian) to convert those fraternal bonds into unconditional bailouts," Analyst Zaidi said.

Pakistan's renowned US-based economist Atif Miah was invited by former Prime Minister Imran Khan to join his government, but he rejected under pressure.

Various global reports have given warnings that the bailout Pakistan is expecting nowhere to be seen in the near future. The latest putdown has come from the New York Times on April 3 when it warned that Riyadh will no longer offer funds to Pakistan and others who refuse to reform their economic infrastructures.

"The kingdom is still sending money abroad. But much of it is now geared towards international investments for profit and influence and kick-starting new industries at home. The Saudi government has also taken on a role similar to the IMF, which gives it even greater sway over regional politics," the Asian Lite wrote quoting NYT.

The changes in Saudi Arabia over the last decade, and especially since the middle of 2017, it said, have rendered traditional ways of working in Riyadh obsolete, the Asian Lite reported.

According to analysts, Pakistani military and civilian rulers can continue visiting Riyadh and asking for the same thing over and over again. The absence of the traditional blank check from Saudi Arabia should have indicated to the Pakistani authorities the drastically different scenario for how this new Saudi Arabia makes decisions.

Analysts' comments come amidst unprecedented economic chaos, not just of 15-day foreign exchange reserves, but amidst industrial slowdown, falling exports and shortages of essential commodities. The holy month has seen food riots and even deaths of poor people standing in long queues awaiting relief at government shops.

The harsh truth is, Pakistan has neither the bureaucratic capability nor the decisive national leadership to allow for investments from Saudi Arabia or the UAE or Qatar to materialize, analysts suggest.

Old Pakistanis trying to scrape the bottom of the barrel have already been relegated to embarrassing caricatures as they continue to Jurassic Park their way around the region and the world. There are lessons from Saudi Arabia that need to be learnt and applied in Pakistan. But an elite that never learns from what is right under its nose is unlikely to benefit from the experience of a true friend, ally and now archetype, beyond its borders, The News International wrote.