Maryam Ibrahim has recently graduated from Lahore College for Women University with a bachelor's in international relations. Her sphere of interest includes the digitalization of international relations, specifically digital diplomacy.
Pakistan, the Economy & IMF
Pakistan, a country with 220 million citizens, is presently experiencing economic decline. Pakistan ranks 34th out of 39 nations in the Asia-Pacific area in terms of economic score (48.8); its total score is lower than the global and regional norms. Due to Pakistan’s foreign reserves hitting a record low of $7.8 billion, the country’s balance of payments is now difficult as well.
The problems brought on by an expanding current account deficit and a decline in the value of the Pakistani rupee relative to the US currency are also intolerable to this Asian nation. Pro-cyclical domestic policies and a challenging external environment combined to cause domestic demand to rise to unsustainable levels. As a result of the subsequent economic overheating, reserve buffers were depleted, inflation soared, and severe fiscal and external deficits were experienced in FY22.
The agreement between Pakistan and the IMF would not be the only factor in resolving all of these issues, but it would be a substantial one with a considerable effect. According to authorities, Pakistan’s government has just secured at least $37 billion in foreign loans and investments, keeping Pakistan from experiencing a financial collapse similar to that of Sri Lanka.
The IMF mandated that the nation first get extra cash to make up the remaining gap in its external finance for the fiscal year 2022-23. The Pakistani government claims that the complete package is now in place. As a whole, Pakistan obtained support and help from a number of allies, such as China and Saudi Arabia, and other Gulf states, including Qatar, to satisfy the IMF’s requirements.
Shehbaz Sharif’s Visit to Qatar
In 1973, Qatar and Pakistan formally established diplomatic ties, which have since grown stronger and closer. Both the states have often exchanged visits, during which common aims and aspirations for international peace, security, and stability have been shared and debated, demonstrating the close relations that exist between the two countries.
Shehbaz Sharif, the prime minister of Pakistan, paid his first official visit to Doha, Qatar, on August 22, 2022, shortly after assuming office. Several ministers accompanied the prime minister. He met with members of the Qatar Investment Authority (QIA) on the first day of his tour, and at a “Pakistan-Qatar Trade and Investment Roundtable 2022,” he spoke with prominent businesspeople from Pakistan and Qatar.
Among the notable Qatari and Pakistani businessmen Mr. Sharif met in Doha were Finance Minister Ali bin Ahmed Al Kuwari, and the CEO of the Qatar Financial Center, Yousaf Al Khater Jaida. The prime minister emphasized his government’s steadfast commitment to fostering an environment that is welcoming to business and investment in Pakistan during the event. He told the Qatari investors that his administration would back them wholeheartedly as they expanded their presence in Pakistan.
Prime Minister Shehbaz Sharif emphasized that Pakistan offered appealing economic prospects for investors in the domains of food security, energy, agriculture and livestock, information technology, hospitality, and tourist industries due to its sizable consumer market and steadily growing middle class.
In the meanwhile, Prime Minister Shehbaz welcomed investors from Qatar to invest in Pakistan’s energy, aviation, agricultural, livestock, marine, tourism, and hospitality industries. He called for Qatari investors to investigate the prospects given by the China-Pakistan Economic Corridor (CPEC), which is aimed at fostering regional connectivity and mutual prosperity. He also highlighted Pakistan’s liberal and business-friendly investment policies.
Qatar‘s Investment in Pakistan
The QIA representatives stated that they were ready to actively seek investment possibilities in Pakistan. The Qatar Investment Authority declared its intention to spend $3 billion in different commercial and investment sectors in the Islamic Republic of Pakistan, according to the Emir Diwan, which serves as the administrative office and sovereign authority of the Emir of Qatar.
Pakistan, a large importer of Qatar’s liquefied natural gas (LNG), likewise intended to pursue a deferred payment arrangement for the LNG acquired under long-term contracts. Pakistan and Qatar have two long-term LNG supply contracts in place that may cover up to nine cargoes per month. The fraternal relationships between the two nations were strengthened by this visit, and new doors for opportunity were also opened.
Both sides had in-depth conversations regarding a range of subjects during the Pakistani PM’s visit to Qatar, including bilateral relations with an emphasis on promoting energy-related cooperation, fostering commercial and investment links, and evaluating new job prospects for Pakistanis in Qatar. Following this trip made by PM Shehbaz Sharif, Pakistan fulfilled the IMF mandate and also secured the required funding.
While this investment may assist in easing Pakistan’s short-term finance issues, according to Uzair Younus, head of the Pakistan Initiative at the Atlantic Council’s South Asia Center, it does not address the primary issue plaguing the nation’s economy. Pakistan’s main problem is its inability to sustainably fund its foreign exchange requirements.
He also believes that the Qataris would anticipate earnings from these investments that must be sent home in dollars. Whether Qatar will actually be able to recover its investments with a profit is a question that has to be answered. According to macroeconomist Ammar H. Khan, the Qatari investment will give Pakistan crucial foreign exchange liquidity in a challenging situation.
He agreed with Younus, though, that the acquisition would not help the nation’s structural issues. Khan stated that it would be a welcome gain if QIA could increase value through its investment while also improving the governance of state-owned firms.
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