Saudi Crown Prince Mohammad bin Salman began a rare four-day Asia visit with an investment pledge to help prop up Pakistan's battered economy.
The crown prince assured investments worth $20 billion with the signing of seven agreements and memorandums-of-understanding (MoUs). The deals signed by Saudi and Pakistani ministers to boost bilateral cooperation include investments in the fields of energy, minerals, petrochemicals, agriculture, and food processing.
"Just consider me the ambassador of Pakistan in Saudi Arabia," said Mohammad bin Salman at a banquet held in the presence of Pakistan Prime Minister Imran Khan, ministers from both countries, and journalists.
The crown prince also referred to the new $20 billion Saudi investment as "phase one" and went on to state that investments are likely to grow bigger in the future. The MoUs and agreements are expected to materialize over the next 10 years.
Though this move may not directly aid Pakistan's balance of payments crisis, Saudi Arabia believes that it will send a positive message to investors across the globe. The slew of new deals will include funding for a $10 billion oil refinery and petrochemicals complex in the coastal city of Gwadar. The deals will also include investments in the power and the renewable energy sectors, including solar and wind projects.
An economy in need
The visit couldn't have come at a better time for Pakistan, which is struggling to step out of a debt crisis. The country has only $8 billion left in foreign reserves and is in desperate need of international support.
IMF and World Bank forecasts project Pakistan's economic growth to slow to 4 percent in the financial year ending June 2019, compared to a 5.8 percent growth in the previous year. The country was also recently downgraded to B- from B by S&P Global ratings.
Pakistan is hoping to receive a bailout from the International Monetary Fund (IMF) but has not yet signed a deal due to strong riders. Analysts believe that Islamabad may need to divulge the amount of debt it is taking from China for the Belt and Road Initiative – a $62 billion project that Beijing began in Pakistan to build power plants, ports and other infrastructure.
Pakistan has previously received a similar IMF bailout of $6.6 billion in 2013. If the IMF agrees to the country's latest request, this would be Pakistan's 13th bailout since the late 1980s.
The UAE and Saudi Arabia have also extended $3 billion each to Pakistan's central bank to help the country bounce back from its economic difficulties. This comes on top of an offer of oil imports worth $6 billion in deferred payments.
Last week, the Saudi embassy in Islamabad lowered fees for visit visas and multiple-entry visas, which came into effect on Feb. 15.
After his two-day visit to Pakistan, the Saudi crown prince will also visit India and China, which is the largest buyer of Saudi crude.