ADNAN AAMIR
Pakistan's chief of army staff Gen. Asim Munir completed his weeklong tour of Saudi Arabia and the United Arab Emirates on
Tuesday, during which sources and experts believe he sought urgent financial assistance from the Gulf monarchies to prevent
Islamabad from defaulting on its loans.
This is not the first time a Pakistani army chief has engaged in economic diplomacy to ease the country's crisis. In July last
year, Munir's predecessor Gen. Qamar Javed Bajwa requested the White House and U.S. Treasury Department to push the
International Monetary Fund for immediate lending of nearly $1.2 billion under its resumed loan program.
This kind of action typically signals a government crisis.
The tour that started last Wednesday came as Pakistan was mired in dire need of foreign funding. Pakistan's foreign
exchange reserves held by the central bank have shrunk to $4.5 billion while the country faces loan repayments of
approximately $8.3 billion over the next three months.
Islamabad's official line is that the army chief's visit was to improve military diplomacy with the two Gulf nations. But multiple
sources admit that the chief has quietly discussed the need for loans. A senior security official told Nikkei Asia under the
condition of anonymity, “Just like all the other looming issues, the case of expected Saudi loans to Pakistan was also
discussed” between Jan. 5 and Jan. 8.
During his visit to Saudi Arabia, Munir met with Saudi defense minister Khalid bin Salman, who tweeted that the two
countries “discussed ways of strengthening our cooperation.”
Though there have been no announcements, another source told Nikkei that Pakistan hopes to receive loans from the
Saudis “by the end of January, as the Saudis have tacitly agreed.” Saudi media reported on Tuesday that the kingdom is
studying ways to increase deposits in Pakistan's central bank from $3 billion to $5 billion, as well as invest up to $10 billion in
the country. However, Munir's role in these potential deals has not been publicly revealed by either government.
Munir is believed to have already made a similar plea to UAE leaders to shore up his country's dwindling foreign reserves.
Though Pakistan's Prime Minister Shahbaz Sharif reportedly will soon visit the UAE with the same goal, sources say Munir's
request must have carried considerable weight due to his high standing.
Saudis have led international efforts to aid Pakistan in recent years. In November 2021, Riyadh deposited $3 billion in
Pakistan's central bank. The same deposit term was extended last month.
Experts believe that Pakistan wants to convey the urgency of the situation by sending army chief Munir — who holds the
country's most powerful political post — to Saudi Arabia.
Michael Kugelman, director of the South Asia Initiative at the Wilson Center, says that Pakistan has long been able to
depend on assistance from its financially sound Gulf partners, especially after the recent upswing in oil prices.
“This suggests they'll be willing to provide, or at least be receptive to eventually providing, badly needed aid to Pakistan,”
Kugelman told Nikkei. He also thinks that Islamabad cannot necessarily count on new assistance from Beijing or the West.
“China is experiencing its own economic stress, compounded by its current COVID mess,” he said. “The Western states have
been hesitant to keep providing bailout money to Pakistan.”
James Dorsey, senior fellow at the S. Rajaratnam School of International Studies in Singapore, believes that Saudis and the
UAE will keep Pakistan afloat just like they are helping Egypt. “Pakistan is important for Saudis due to proximity with Iran, its
potential consumer market, and militancy issues faced by the country,” he told Nikkei.
While Islamabad is trying to get loans from Gulf allies, it also wants to secure a $1.7 billion bailout package from the IMF
after passing the ninth review of the Extended Fund Facility.
Experts feel that Pakistan still needs structural changes and cannot keep relying on aid from the IMF and friendly countries
like Saudi Arabia.
Kugelman said that no matter how much bailout assistance and other new aid packages Pakistan may secure from the IMF
and other countries, none will address the underlying issues that have long shackled Pakistan's economic growth, such as
mounting debt, a lack of export diversification, insufficient government revenue, and corruption.
“Saudis understand that the help that they provide to Pakistan only brings a temporary reprieve and it's not a permanent
solution,” Dorsey also said.
“This arrangement has to end at some point in time and then Pakistan will have no new door to knock.”
