The Special Investment Facilitation Council (SIFC), a collaboration between the military and civilian authorities, is optimistic about the potential influx of multibillion-dollar foreign investments following the anticipated IMF deal. The council is working to provide guarantees for the repatriation of dividends in foreign currency to attract foreign investors.
Meanwhile, the Kingdom of Saudi Arabia (KSA) is expressing interest in acquiring stakes in the Reko Diq project but appears hesitant to invest in refinery construction in Pakistan. With a staff-level agreement between Pakistan and the IMF in place and a pending approval for a $7 billion loan request by the IMF’s Executive Board, the foreign exchange reserves of the State Bank of Pakistan (SBP) remain at $9.1 billion. However, foreign investors are uneasy with this level.
Official sources disclosed that Pakistan aims to attract $17 billion in foreign investments from the UAE ($10 billion), KSA ($5 billion), and Azerbaijan ($2 billion), with foreign investors seeking guarantees for the repatriation of their dividends. Some senior government officials have indicated that the approval of the IMF program under the $7 billion Extended Fund Facility (EFF) is crucial for these investments to materialize.
Despite doubts about SIFC’s efforts to attract foreign investment, SIFC officials emphasize that the $17 billion investment will not materialize in a single year but rather over several years in phased and gradual manners, focused on bankable projects.
KSA has exhibited interest in investing in Reko Diq and solar panel manufacturing projects in Pakistan, with a tentative agreement to purchase a 15% stake in the Reko Diq project. Additionally, the signing of a Free Trade Agreement (FTA) with the Gulf Cooperation Council (GCC), which includes the Bilateral Investment Treaty (BIT) allowing international arbitration, holds significance in this context.
Furthermore, Pakistan has negotiated a term sheet and valuation with Saudi Arabia, leading to the establishment of the Manara Minerals Investment Company, which aims to invest in mining assets globally and support resilient global supply chains. Additionally, the Reko Diq Mining Company (RMDC) has been tasked with hiring Levies and defining payment mechanisms for Balochistan.
In addressing investment disputes, Pakistan has proposed a graduated approach, mandating an eight-month period for resolution at domestic forums, with recourse to the International Centre for Settlement of Investment Disputes (ICSID) as an international arbitration forum if disputes remain unresolved.
