The benevolent friend

The Saudis are looking at the bigger picture of the world economy

The Saudis are never short of exhibiting benevolence. At the same time they are looking at the bigger picture of the world economy, and are aware of the crunch that developing states are facing in the backdrop of pandemic and the Russo-Ukrainian war. Finance Minister Mohammed Al-Jadaan, nonetheless, spelt out his country’s aid and assistance strategy at the World Economic Forum by saying Riyadh is mulling more ‘creative ideas’ to support cash-starved economies, and Pakistan is one of the beneficiaries, per se.

This new approach has come days after the Royal Kingdom took a departure from giving away unconditional grants and deposits to its friends and allies. What it literally entails is that the dollar-pegged biggest oil exporting economy of the Middle East is broadening its focus, and as a mark of leadership is ready to trade with other major currencies of the world, and dole out tranches as and when it feels necessary for the sake of bilateralism.

This new aid paradigm has come as a blessing in disguise for Pakistan. As Islamabad’s forex reserves slumped to a dangerous level, not enough even to pay for a week or so of incoming receipts, Saudi Arabia was kind enough to extend the retention of a $3 billion deposit, and also doled out an additional billion dollars. Moreover, its kindness to talk it out with the international lenders to showcase exceptionalism while dealing with Pakistan in its needy hour is genuine leadership. So is the case with the UAE which too is forthcoming with contingency funds in times of extreme squeeze.

So far so good. But that does not come to solve the misery and plight of Pakistan’s economy. It needs a structural change, and that too which relies on a long-term policy with sustained measures of law and not subject to political whims and somersaults. The country’s biggest tragedy is that it is indebted by $120 billion, and its current accounts deficit and non-development expenditures eat away all of its balance-sheet. Cash injections will only come to put it to solace for the time-being. Self-reliance and a policy of mandatory austerity only can it help sail through.

Published in The Express Tribune, January 23^rd, 2023.

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