Islamabad Scrambles To Plug Gaps

Pakistan scrambles to pay its debts.

Staring at virtually empty coffers and a payments crisis, and with a much-anticipated bailout package from the International Monetary Fund (IMF) delayed yet again, Pakistan is casting about for ways to finance its debt and attract new investment.

The absence of an IMF deal leaves Prime Minister Imran Khan’s government in a box. Even after pledging to reform government finances, curb expenses, do more to raise tax receipts (including higher rates and better collection) and open the door to foreign investment, Pakistan, as of press time, has yet to obtain a bailout deal from the fund.

A meeting between Khan and IMF chief Christine Lagarde in Dubai early last month was supposed to be a clincher. Except for generic statements, however, not much seems to have moved forward after their discussion; although Lagarde did say, “I reiterated that the IMF stands ready to support Pakistan.”

Khan, accordingly, is casting a wider net for investment and debt financing. Notably, he rolled out the red carpet in mid-February for a visit by Saudi Arabia’s Crown Prince Mohammed bin Salman.

Khan and the prince clinched investment deals worth $20 billion during the latter’s two-day visit. The raft of pacts included a Saudi agreement to set up a petroleum refinery and petrochemical complex at the port of Gwadar and invest in two power projects run on natural gas.

Overtures to Russia appear to have yielded $14 billion in new investments, likewise in Pakistan’s energy sector. Vitaly Markelov, deputy chair of Gazprom, recently announced a package that includes setting up an offshore gas pipeline between Lahore and Karachi and several underground storage projects.

Yet another deal was announced following a meeting between Khan and Abu Dhabi Crown Prince Sheikh Mohamed bin Zayed Al Nahyan. The United Arab Emirates extended $3 billion in cash assistance in December plus, in January, an additional $3.2 billion in oil supplies on a deferred-payment basis. This may provide temporary relief to Pakistan as it struggles to meet its monthly oil-import bills.