Qatar investment in Pakistan the right step

Pakistan got much needed relief with the Qatar Investment Authority (QIA) announcing $3 billion commitment to finance projects in various sectors. The announcement came on Wednesday as Pakistan Prime Minister Shahbaz Sharif on a visit to Doha had official talks with Qatari Emir Sheikh Tamim Bin Hamad Al Thani on Wednesday. The Pakistan Prime Minister had a meeting with the QIA on Tuesday.The Amiri Dewan said in a statement: “His Highness stressed the importance of the brotherly and strategic relations between the two countries and their aspiration to enhance economic partnership by raising trade exchange and promoting investments through the Qatar Investment Authority.” A senior Pakistani minister said that Pakistan got more than what it needed. He also said, “They are interested in airports, seaport terminals, LNG-fired power plants, solar energy, [and] shares in the stock markets.”

Pakistan has been faced with a balance of payments crisis, and the foreign exchange reserves falling to $7.8 billion, sufficient for a month’s import. Meanwhile, Pakistan had been negotiating with the International Monetary Fund (IMF). The IMF executive board at its meeting on August 29 would consider resuming a $6 billion loan. Last month’s negotiations at the staff level led to the agreement of disbursing $1.7 billion. Pakistan’s central bank said that its external financial needs for the current financial year have been fully met, and the danger of defaulting on payments has been reduced.

The danger posed by economic slide has not passed. Commenting on the Qatar package, Uzair Younus, director Pakistan Initiative at the Atlantic Council’s South Asia Centre said, “Pakistan’s core issue is its inability to sustainably finance its own foreign exchange needs. The Qataris, through these investments, will expect profits that will need to be repatriated in dollars. One must ask whether Qatar will truly be able to recuperate its investments with a profitable return.” Relief package as that provided by Qatar can stabilise the economy only when other remedial measures are taken.

Pakistan also faces the tough question about the economy: Can it be an attractive investment destination in the sense that it promises profits on investments? It is not easy for Pakistan to create the conducive economic conditions for foreign investments in the country because the country had been going through a political crisis along with the economic one. There is a need for a broad political agreement among parties and leaders on how to get the economy back on the rails.

Apart from the political troubles and the challenge of extremists like Tehreek-i-Taliban Pakistan, there was the issue of social underdevelopment with education and health taking a back seat. The country’s think upper crust is well-off as well as well-educated, and it is generally the members of this class who dominate the country’s politics. A thriving market economy can only happen when there is a larger middle class with the education and purchasing power. So, a robust economic growth rate requires a broader social basis. Most political parties and their leaders are quite caught up in the power game, and they have not been able to evolve a social programme for uplift of poor people and the removal of illiteracy.

To get out of the vicious cycle of low investment and low growth, the government would have to focus on the social sector, including health and education. Most importantly, people need to be employed so that they earn and spend, and they also save. These issues have to be placed at the centre of the political agenda. The people of Pakistan pin their hopes on governments to do what is good for the country, especially in terms of assuring basic services and create inclusive systems.