Pakistan and Saudi Arabia have struck fresh trade deals, covering a range of sectors in what could be the first in a series of more accords between the two allies. The agreements reached this month are worth $2.2bn. They strengthen trade ties between the two countries and underscore the critical role Saudi investment plays in stabilising Pakistan’s fragile economy.
The memorandums of understanding were signed on 10 October by Saudi Arabia’s Minister for Investment, Sheikh Khalid Al Falih, and Pakistan’s Prime Minister Shehbaz Sharif, flanked by influential Chief of Army Staff General Asim Munir.
This latest agreement came after Pakistan had been grappling with an external debt crisis, inflation, and dwindling foreign reserves. It showed the extent of the Saudi commitment to the economic recovery underway at its strategically located ally on the other side of the Gulf. It is seen there as a much-needed lifeline.
At the ceremony, Sharif said: “This is a true manifestation of the sincerity and affection our Saudi brothers have for Pakistan.” The Saudi delegation was in Islamabad for three days. It included high-ranking officials from Saudi companies specialising in energy, mining, agriculture, and industry, underscoring the breadth of the agreement and the seriousness of Saudi Arabia’s commitment to supporting Pakistan.
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The relationship between the two nations extends beyond economics and diplomacy. It is deeply rooted in Riyadh and Islamabad's religious, cultural, and strategic connections. Historically, Saudi Arabia has been one of Pakistan’s largest benefactors, providing financial support, loans, and oil facilities during crises. This alliance has only deepened over the years, especially under the leadership of Saudi Crown Prince Mohammed bin Salman, who has taken a personal interest in fostering stronger ties. October’s signing ceremony revealed how much progress has already been made.
Top-level support
Pakistan’s military, particularly General Munir, has played a crucial role. His personal connections within the Saudi royal family—including Crown Prince Mohammed—have proved invaluable, helping to convince the Kingdom to play a more active role in supporting Pakistan’s economy. This also shows how military diplomacy in the country has evolved to take on a more active role in pursuing economic goals.
Earlier this year, when Sharif visited Saudi Arabia, Prince Mohammed pledged $5bn in investments, focusing on key sectors such as energy, mining, and infrastructure. This commitment was reiterated during the recent signing ceremony in Islamabad when Al Falih described the $5bn package as the “tip of the iceberg”.
At the Pakistan-Saudi Arabia Business Forum, he added: “There are essentially no limits to what Saudi Arabia and Pakistan can do in the economic sphere, just like there are no limits to our friendship, to our bonds, and our historic relations”.
Securing support
Pakistan’s economic recovery has relied heavily on external support, particularly from international financial institutions like the International Monetary Fund (IMF) and bilateral partners like Saudi Arabia. October’s $2.2bn investment package is seen as a critical injection of foreign capital into Pakistan as it undertakes stringent economic reforms as part of the IMF’s stabilisation programme.
These measures, including cutting subsidies and increasing taxes, have helped improve key economic indicators. However, the country’s foreign reserves remain precariously low. Saudi Arabia’s commitment to fast-tracking investments— particularly in energy and infrastructure—is expected to alleviate some of these economic pressures.
