Pakistan is bracing itself for a potential economic impact following the recent announcement that Saudi Arabia will no longer provide blank checks aid to regional allies. This change in aid strategy is said to be part of a broader shift towards economic accountability for struggling states.
Saudi Crown Prince Mohammed bin Salman has insisted on economic overhauls such as cutting subsidies and privatizing state-owned companies before releasing any further financial assistance. This new approach is aimed at ensuring that the aid money is utilized efficiently and towards sustainable development goals.
Pakistan has been heavily reliant on foreign aid and loans to keep its economy afloat, and this change in attitude could have far-reaching implications for the country’s economy. While Saudi Arabia is still sending money abroad, it is now geared towards international investments for profit and influence, as well as kick-starting new industries at home, such as electric vehicles.
This shift towards economic accountability for struggling states could result in Pakistan having to pursue more robust economic policies, such as promoting private investment and reducing government expenditure, to meet its financing needs. The country may also need to consider diversifying its sources of aid and loans, reducing its dependence on any single country or institution.
IMF approach
Furthermore, with Saudi Arabia taking a more assertive stance in its leadership, larger nations like Pakistan are effectively beholden to it, and the Saudi government’s new role similar to that of the International Monetary Fund gives it even greater sway over regional politics.
However, it is also possible that this change in aid strategy could ultimately benefit Pakistan’s economy by promoting more sustainable and efficient use of aid resources. It could also lead to more significant foreign investment, particularly in industries such as infrastructure and energy, that could drive economic growth and create employment opportunities.
Pakistan’s economy is likely to feel the immediate effects of Saudi Arabia’s shift towards economic accountability for struggling states. However, the country could take this opportunity to pursue more robust economic policies and diversify its sources of aid and loans.
While there may be some short-term challenges, this change in aid strategy could ultimately result in a more sustainable future for Pakistan should the country decide to take on the challenge and focus their efforts on more self-reliant investments and initiatives.
