UAE announces $10bn investment package for Pakistan

 The UAE on Thursday committed $10bn to invest in promising economic sectors in Pakistan, Islamabad said.

Pakistan has been pushing for foreign investment in a bid to shore up its $350bn economy, which has struggled with high inflation and low growth as it navigates a tough reforms mandated by the International Monetary Fund (IMF).

The investment pledge, came after a meeting between Pakistani Prime Minister Shehbaz Sharif, on a two day visit to the UAE, met President Sheikh Mohamed bin Zayed Al Nahyan, reported state news agency WAM.

“President of the UAE Sheikh Mohamed bin Zayed Al Nahyan assured (Pakistan of) the UAE’s support in all circumstances and made the commitment of investing $10bn in multiple sectors,” a statement from Pakistan‘s Prime Minister’s Office said.

Prime Minister Muhammad Shehbaz Sharif meets President of UAE, H.H. Sheikh Mohamed bin Zayed Al Nahyan in Abu Dhabi.

Discussions will focus on various sectors, particularly the promotion of trade and investment between Pakistan and the UAE.

The meeting will also cover… pic.twitter.com/oucrxDnmWZ

— Pakistan Embassy UAE (@PakinUAE_) May 23, 2024

It did not specify which areas the investment would be in.

The statement said Sharif emphasised strengthening strategic partnerships, including in the field of information technology, renewable energy and tourism.

Pakistan needs foreign investment to boost its economy and shore up its currency reserves to meet rising external repayment obligations.

Pakistan-IMF talks

It is in talks with the IMF to secure a long term bailout deal, expected to go as high as $8bn.

An IMF team is in Pakistan to discuss the country’s budget and economic recovery policies after the country successfully completed a short term $3bn IMF bailout programme last month.

An IMF mission and Pakistan have made significant progress towards reaching a staff-level agreement for an extended fund facility, the global lender said on Friday.

The IMF has opened discussions with Pakistan on a new loan programme after Islamabad last month completed a short-term $3bn programme, which helped stave off a sovereign debt default.

An IMF team, led by mission chief Nathan Porter, concluded discussions with the authorities on Thursday after arriving in Pakistan on May 13, the lender said in a statement.

“The mission and the authorities will continue policy discussions virtually over the coming days aiming to finalise discussions, including the financial support needed to underpin the authorities’ reform efforts from the IMF and Pakistan‘s bilateral and multilateral partners,” Porter said.

Pakistan is likely to seek at least $6 billion under the new programme and request additional financing from the IMF under the Resilience and Sustainability Trust.

Ahead of the discussions, the IMF had warned that downside risks for the Pakistani economy remained exceptionally high.

“The authorities’ reform programme aims to move Pakistan from economic stabilisation to strong, inclusive, and resilient growth,” Porter added.