Despite U.S. $ 3 billion aid from Qatar, Pakistan’s economy continues to struggle
As per the directives of His Highness Amir, the Deputy Prime Minister and Minister of Foreign Affairs, Qatar – Sheikh Mohammed bin Abdulrahman Al-Thani, the oil-rich country will make an investment of U.S. $ 3 billion in the sluggish economy of Pakistan.
The announcement came a day after the Emir of Qatar – Sheikh Tamim bin Hamad concluded his visit to Islamabad where he was conferred with highest civil honour of Pakistan, ‘Nishan-e- Pakistan’. During his visit, he agreed to help Pakistan in trade, fight money laundering activities and curb terror financing. The funds would be infused in form of deposits and direct investments.
Qatar is the fourth nation to extend financial aid to Pakistan in the last 11 months, after cricketer turned politician, Imran Khan came to power. Ever since the start of his term, his Government has been struggling to overcome the increasing Balance of Payments (BoP).
With this, the foreign debt continues to rise for Pakistan. Earlier, they had borrowed U.S. $ 4.6 billion from People’s Republic of China in shape of deposits and commercial loans. Saudi Arabia helped them with U.S. $ 3 billion cash deposit and U.S. $ 3.2 billion oil facility on deferred payments. Apart from this, the United Arab Emirates (U.A.E.) had also lend U.S. $ 2 billion cash deposit to Pakistan.
His Highness Amir, the Deputy Prime Minister and Minister of Foreign Affairs, Qatar said, “The Qatari-Pakistani economic partnership will amount to $9 billion. Qatar affirms its aspiration for further development in the relations between the two countries at all political, economic, sports and cultural levels.”
The Advisor to Pakistan’s Prime Minister on Finance – Dr. Abdul Hafeez Shaikh said, “I want to thank the Emir of Qatar HRH Sheikh Tamim Bin Hamad Al Thani for announcing $3 billion in deposits and direct investments for Pakistan and for Qatar’s affirmation to further develop relations between the two countries.”
Besides, in May 2019 Pakistan has reached a preliminary agreement with the International Monetary Fund (IMF) for a bailout package of U.S. $ 6 billion.
The fact remains that despite so much of capital infusion from various nations and institutions, the official foreign currency reserves held by State Bank of Pakistan, stand at only U.S. $ 7.6 billion as of June 14, 2019.
In order to improve its debt profile, Pakistan is required to convert its short-term loans into long term borrowings. A total of 41% of its budget goes into debt servicing. The continuous inability of all the former and existing Government of Pakistan in terms of increasing export, has increased Pakistan’s dependency on bilateral and multilateral creditors.
