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  • Jun, 15th, 24

i ECONOMY

Saudi team's Pakistan visit spurs positive economic sentimentBreaking

May 02, 2024

The main objective of the Saudi delegation's visit to Pakistan was to pinpoint the sectors ripe for investment. Anticipation for concrete agreements has surged ahead of the forthcoming visit of Crown Prince Mohammad bin Salman (MBS), Chief Economist at the Ministry of Planning, Development, and Special Initiatives Aslam Javed told WealthPK. He said a positive sentiment has coursed through the stock and currency markets, igniting optimism for economic rejuvenation. He warned that a bullish stock market might not accurately reflect the broader economic sentiment and stressed the importance of maintaining a market-based rupee-dollar parity in accordance with the agreements made with the International Monetary Fund (IMF). Javed emphasized the need for sustainable economic reforms overreliance on pledged investment inflows. During interactions with the media, the Saudi foreign minister underscored the kingdom's support to Pakistan's efforts in establishing the Special Investment Facilitation Council (SIFC) last year. The Council aims to streamline the implementation of pro-investment decisions across various administrative levels, bolstering both economic and security initiatives.

In an interview with WealthPK, Additional Secretary Trade and Diplomacy at the Ministry of Commerce Ahsan Ali Mangi emphasized Pakistan's economic strategy, which centres on attracting foreign investment and tackling enduring economic hurdles. “With Pakistan currently engaged in its twenty-third IMF program, the policymakers are intensifying efforts to attract both foreign and domestic investment, particularly in vital sectors like agriculture, IT, mining, minerals, and energy,” he pointed out. However, attracting investment from foreign countries is the main strategy for the current group of leaders in Pakistan to deal with the ongoing economic problems that the previous governments have struggled with. Privatization emerges as a key strategy to revitalize the struggling state-owned enterprises, yet it is not without challenges. Scepticism surrounds the effectiveness of privatization efforts without comprehensive cost-benefit analyses and safeguards against monopolistic practices.

Additionally, the decline in private sector credit underscores the need for a balanced approach to the economic policy. Pakistan has often turned to the IMF for help (Pakistan is now on its twenty-third program and has asked for the next one). Last week, the finance minister talked about this in Washington DC when he spoke to the US Pakistan Business Council. He said the government was committed to getting investments from both inside and outside the country in important areas like farming, technology, mining, and energy. As Pakistan navigates the complexities of privatization and foreign investment, cautionary voices advocate for lessons learned from the past pitfalls. A thorough examination of incentives, transparency, and market conditions is essential before committing to binding agreements. Only through diligent oversight can Pakistan chart a course towards sustainable economic growth.

Credit: Independent News Pakistan