What Does Saudi Arabia’s Cash Offer to Pakistan Mean?

Saudi Arabia has announced that it is to make a huge foreign investment – in fact, the biggest in Pakistan’s history. Pakistan’s finance minister, Asad Umar, announced that cabinet approval needs to be gained before the investment can be accepted, but seemed excited at the prospect. Saudi Crown Prince Mohammad Bin Salman seems eager for the deal to go through as he keeps nudging Pakistan “through other people to hurry up”. But what would a huge Saudi investment in Pakistan mean, and what would the ramifications be throughout the rest of the world?

The foreign investment is likely to come in the form of a bailout of Islamabad, the subject of recent talks between the two nations. The move has already received some raised eyebrows from the international community as many others pulled out of the Saudi investment conference while the case regarding murdered journalist Jamal Khashoggi is properly investigated. Pakistan attended and made clear that they would be happy to accept foreign investment into projects in Pakistan. Pakistan is in the throes of a balance-of-payments crisis and was potentially even looking for an IMF bailout, so the money from Saudi Arabia would be a welcome offer to shore up Pakistan’s finances.

Measuring the effect the Saudi investment into Pakistan might have can be done through the way it would affect global stock markets. This can allow those interested in trading using platforms such as that offered by IG to monitor the various commodities that would be affected by any major changes in either Saudi Arabia or Pakistan. Saudi Arabia is famous for its oil reserves, while Pakistan exports rice, cotton fibre, and various textiles – particularly those used to make sportsgoods. Indeed, a recent announcement ensured that five export industries were offered cheaper electricity in order to boost the country’s economy.