Vision 2030 putting Saudi Arabia on the map for global investors, experts say

Special Vision 2030 putting Saudi Arabia on the map for global investors, experts say
Vision 2030 is continuing to bear fruit. Shutterstock
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Updated 12 April 2024
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Vision 2030 putting Saudi Arabia on the map for global investors, experts say

Vision 2030 putting Saudi Arabia on the map for global investors, experts say

JEDDAH: Saudi Arabia’s investment landscape is poised for a prosperous future, fueled by its equity and debt markets, a range of economic experts have told Arab News.

Senior figures from the Kingdom’s branch of investment bank J.P. Morgan, financial media outlet Bloomberg, and Saudi tourism funding firm ASFAR all spoke of the positive impact of the Vision 2030 economic diversification strategy. 

By focusing on the growth of various sectors, such as tourism, healthcare, and renewable energy, the Kingdom aims to reduce its economic reliance on fossil fuels, foster innovation, create jobs, and enhance citizens’ quality of life. 

This is already bearing fruit, according to Amine Fichtali, head of investment banking at J.P. Morgan Saudi Arabia.

He told Arab News that the Kingdom stood out as an exciting, compelling investment story for investors.

Fichtali added that Saudi Arabia is a top-down, long-term structural story underpinned by socio-economic transformation and the execution of several regulatory reforms that help to promote the Kingdom globally.

These sentiments were echoed by European Director of Bloomberg Constantin Cotzias. 

He believes that Saudi Arabia — with various reforms in its regulatory framework — is emerging as a favorite destination for international investors. 

Cotzias told Arab News that international investors want three things.

“They want liquidity, a framework of governance and regulation that works, and a balance of good supervision and innovation to be properly balanced. And then they want that framework to encourage them with investment and the growth in that investment,” he said, adding that Saudi Arabia is on the right path.

One of the initiatives to attract businesses to the Kingdom was to offer tax breaks and other incentives to companies that applied to move their regional headquarters to Riyadh before the end of 2023.

This helped encourage some 200 firms to make the shift, including Northern Trust, Bechtel and Pepsico from the US, and IHG Hotels and Resorts, PwC, and Deloitte from the UK.  

Google, Microsoft and IBM as well as Oracle, Pfizer and Amazon, also have regional headquarters in Riyadh.




Saudi Arabia’s Minister of Investment Khalid Al-Falih presented IBM executives with the regional HQ license in January. IBM

Tourism strategy 

Tourism is one of the key sectors driving the economic shift in the Kingdom, and Saudi Arabia has launched several initiatives to grow the industry.

These include the opening of historical sites, easing of visa restrictions, and the promotion of cultural heritage to attract international visitors. 

All these measures are expected to have huge economic returns and boost the tourism sector resulting in the creation of direct and indirect jobs.

The Kingdom is targeting more than 30 million pilgrims and 150 million tourists every year as part of its ambitious Vision 2030, having already met its original goal of 100 million visitors.

Speaking during a ministerial panel session at the Private Sector Forum held in Riyadh in February, Tourism Minister Ahmed Al-Khateeb said that the total number of hotel rooms in the Kingdom reached 280,000 in December.

“The quality of rooms and projects is excellent and will place the Kingdom among the best in the world. The target for 2030 is approximately 550,000 hotel rooms,” the minister informed.

Moreover, the Ministry of Tourism recently unveiled the Tourism Investment Enablers Program, aimed at streamlining business practices and bolstering investment appeal for both local and international investors.

As part of the program, the Ministry of Tourism, in collaboration with the Ministry of Investment, announced the Hospitality Sector Investment Enablers Initiative, aiming to increase and diversify tourism offerings and bolstering the capacity of hospitality facilities in targeted tourist destinations across the Kingdom.

This initiative aims to attract investments in the hospitality sector, with a value of approximately SR42 billion ($11.46 billion), projecting estimated revenues of about SR16 billion to the Kingdom’s gross domestic product by 2030, reported SPA.

Al-Khateeb stated: “We witnessed a 390 percent increase in demand for tourism activity licenses last year, marking the beginning of the Kingdom’s significant investment in the tourism sector over the next decade, providing opportunities and a conducive investment environment for both local and international investors.”

Meanwhile, ASFAR CEO Fahad bin Mushayt told Arab News many regulations have recently changed, and more are yet to come, including the facilitation of visa issuance, be it for business, religious, or tourism purposes.

ASFAR is a company owned by the Public Investment Fund to drive investments in tourist destinations and projects across the Kingdom. 

“The other target that the country has set as part of Vision 2030 is to drive the contribution of tourism to the gross domestic product from 3 percent to 10 percent by 2030,” he added.




Fahad bin Mushayt, CEO of ASFAR. (Supplied)

National industrial program 

The Saudi industrial sector is significantly contributing to economic diversification through various programs and initiatives.

One of these is the National Industrial Development and Logistics Program, which seeks to elevate the Kingdom into a premier industrial powerhouse and a worldwide logistics center.

NIDLP focuses on optimizing the mining and energy sectors’ value while harnessing the full potential of other local resources. 

Speaking at the NIDLP annual ceremony in December, Minister of Industry and Mineral Resources Bandar Alkhorayef explained that the program acquired five new renewable energy projects to ensure reasonable costs.  

He noted that the NIDLP program has significantly contributed about 35 percent of the non-oil GDP, making up to SR345 billion. 

Furthermore, NIDLP announced investments worth SR206 billion in non-oil exports and SR97 billion in nongovernmental funds.

Alkhorayef also highlighted the mining sector’s record revenues of over SR1.45 billion in 2023. 

Economic journalist Jamal Banoon told Arab News that diversifying the industrial base is a strategic challenge for Saudi Arabia, as it seeks to develop this sector sustainably and achieve economic diversification.

“One of the most important aspects is investing in infrastructure and research and development, while enhancing industrial infrastructure to accommodate investments and develop industrial projects, with the aim of improving production techniques and processes and enhancing efficiency,” he said.

Banoon added that, in recent years, Saudi Arabia has focused on emerging industries, including renewable energy, information and communications technology, robotics, and smart manufacturing. 

Consequently, this direction will drive it toward more alliances with international companies to transfer technologies and experiences, enhance competitiveness, and expand markets.

Furthermore, he added that Saudi Arabia has invested around $50 billion in infrastructure and research and development so far, especially in the field of emerging industries. It has also achieved significant growth in sectors such as aviation, space, and maritime industries.

Renewable energy drive 

Saudi Arabia has been actively pursuing renewable energy initiatives to diversify its energy mix and reduce its reliance on fossil fuels, with Vision 2030 outlining ambitious goals for the Kingdom's renewable energy sector.

The vision aims to increase the share of renewable power in the energy mix to 50 percent by 2030.

NEOM, for instance, is a flagship project aimed at developing a futuristic city powered entirely by renewable energy. It envisions a sustainable and environmentally friendly urban center with a focus on renewable energy and innovation.

Moreover, the Green Riyadh Initiative aims to transform the capital city into a more sustainable and environment-friendly metropolis. It includes plans for expanding green spaces, promoting energy efficiency, and implementing renewable energy projects.

Furthermore, Saudi Arabia has been investing in research and development of renewable energy technologies to drive innovation and enhance the efficiency of renewable power generation.

According to Banoon, Saudi Arabia is expected to become a leader in clean energy and achieve environmental sustainability.

“Within its plans and programs toward further economic liberalization and income source diversification, the Kingdom has invested in renewable energy sources. It aims to increase productivity from the current 300,000 megawatts through the Sakaka solar power plant and the Dumat Al-Jandal wind farm, expecting to reach 2 gigawatts of renewable resources,” he said, adding this project relies on generating electricity from traditional fuel sources.

Healthcare development 

Saudi Arabia’s efforts to diversify its economy through healthcare are commendable and strategically significant.

By focusing on the healthcare sector as a key driver of economic diversification, the Kingdom aims to enhance the quality of healthcare services, improve accessibility, and foster innovation and technological advancement within the industry.

Banoon commented that the healthcare sector diversification strategy is crucial for Saudi Arabia’s economic resilience and sustainability.

“Saudi Arabia’s investments in healthcare infrastructure are pivotal for attracting foreign investment and talent, driving economic growth in the long term,” the economist said, adding that investing in preventive healthcare not only improves public health outcomes but also reduces costs in the long run, contributing to economic stability.


Nearly all Gazans in poverty, Palestinian Authority facing ‘imminent fiscal collapse’ - World Bank

Nearly all Gazans in poverty, Palestinian Authority facing ‘imminent fiscal collapse’ - World Bank
Updated 12 sec ago
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Nearly all Gazans in poverty, Palestinian Authority facing ‘imminent fiscal collapse’ - World Bank

Nearly all Gazans in poverty, Palestinian Authority facing ‘imminent fiscal collapse’ - World Bank

RIYADH: Nearly every Gazan is living in poverty as the Israel-Hamas war continues to have a “devastating impact” on the Palestinian economy, according to the World Bank.

An analysis by the organization sets out how the economic consequences of the conflict have spread beyond Gaza and into the West Bank, with widespread unemployment and underemployment combined with inflation causing a rapid decline in purchasing power for households in both areas.

Nearly half a million jobs across the territories have been lost since October 2023, and per capita gross domestic product declined by 12 percent in 2023.

Israel has bombarded the densely populated Gaza Strip following the Oct. 7 Hamas attack on Israeli communities. Israel says Hamas killed some 1,400 people including children, and took more than 200 hostages, some of them infants and older adults.

The fiscal situation of the Palestinian Authority has dramatically worsened, according to the World Bank, with a financing gap expected to reach $1.2 billion heightening the risk of disorderly adjustments and a potential imminent fiscal collapse.

In May 2023, the World Bank forecast the Palestinian economy to grow about 3 percent by the end of the year, after a 4 percent post-COVID-19 boost in 2022.

That analysis has been completely reversed by the conflict, with the organization now forecasting the Palestinian economy will contract anywhere between 6.5 percent and 9.4 percent during 2024. 

“The northern governorates of Gaza are experiencing a full-blown famine, with food insecurity reaching catastrophic levels, particularly in the northern areas and extending southward,” said the World Bank’s latest report, adding: “At least one in four Gazan is experiencing catastrophic hunger, and 95 percent of the population is suffering from food insecurity.”

Most children in Gaza are at risk of “stunting” because of the famine, the analysis added.

Reflecting on the economic impact of the conflict, the report said the outlook of the Palestinian territories for the full year of 2024 “remains highly uncertain, depending on the severity and duration of the conflict, changes in Israeli policies in the West Bank, including those related to access to the Israeli labor market, and the outcome of the clearance revenue dispute.” 

The Palestinian Authority is facing a significant decrease in clearance revenue transfers and shrinking domestic resource mobilization, coupled with a rigid current expenditure envelope, the World Bank said.

“The PA’s financing gap after aid for 2023 reached $682 million or 3.9 percent of GDP, and the situation is expected to worsen further in 2024, with a potential financing gap of up to $1.2 billion. A focus on fiscal policies, especially those improving spending efficiency, particularly regarding the unsustainable wage bill and enhancing tax mobilization, must remain a top priority in the reform agenda,” said the report.

The World Bank argued that the banking sector across the territories is “well regulated” by the Palestine Monetary Authority, which has “steadily been building the capabilities and resilience of local banks.”

The report added: “Presently, the banking system is well capitalized, liquid, and compliant with the Capital Adequacy Requirements set by the PMA. At the same time, institutional and economic difficulties are tilting the risks upward for the financial sector. Actively avoiding further instability is crucial to allow the financial sector to maintain its established function as a stable pillar during periods of economic challenges.”


Startup Wrap – regional startup activity flourishes  

Startup Wrap – regional startup activity flourishes  
Updated 58 min 45 sec ago
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Startup Wrap – regional startup activity flourishes  

Startup Wrap – regional startup activity flourishes  

CAIRO: The startup ecosystem in the Middle East and North Africa region saw a flurry of activity as venture investments and acquisitions bloom. 

Saudi Arabia-based Software-as-a-Service provider Merit has raised $12 million in its pre-series B funding round, led by Alistithmar Capital i-Cap and followed by existing series A investors Tech Invest Com and Hambro Perks Oryx Fund. 

Founded in 2016 by Julie Barbier-Leblan and Thrishan Padayachi, Merit assists businesses in increasing customer and employee engagement via a suite of cloud-based SaaS platforms, enterprise solutions, applications, and software.  

This new round will help Merit develop its technology to enhance customer engagement. In 2021, Merit raised $5 million in a series A round led by Saudi Arabia’s Impact46, along with Tech Invest Com, Arzan VC, Hambro Perks Oryx, and several regional angel investors. 

Riyad Capital launches 1957 Ventures to support digital transformation 

Riyad Capital, backed by Riyad Bank, has launched the 1957 Ventures investment fund to drive transformative growth in Saudi Arabia’s fintech sector. 

The fund aims to accelerate the Kingdom’s digital transformation by creating opportunities for innovative fintech business models. 

Abdullah Alshwer, CEO of Riyad Capital, stated, “The 1957 Ventures Fund embodies a forward-thinking financial vision aligned with the Kingdom’s ambitious digital transformation goals; this fund signifies a strategic investment in the future of Saudi fintech.”  

“Our institutional approach will unlock new levels of innovation, driving both sector growth and sustainable economic impact,” he added. 

Saudi logistics startup MDD closes $1.3m series A round 

Saudi Arabia-based logistics startup MDD has closed its series A round with $1.3 million in funding for a 5 percent stake with a valuation of $26 million. 

Founded in 2019, MDD provides supply chain solutions for businesses. 

Saudi startup Sorbet’s raises funding round from web3 VC Adverse 

Saudi web3 startup Sorbet raised an investment round from the Kingdom’s recently announced venture capital firm Adverse. 

Founded by Rami Djebari and Maher Ayari, Sorbet aims to simplify business processes for freelancers by cutting fees and intermediaries. 

“Receiving support from an experienced partner like Adverse will accelerate our development and enhance our market strategy. This collaboration is a milestone in breaking down financial barriers and enabling limitless growth opportunities for professionals in the region,” Djebari said. 

Egyptian fintech e-Finance acquires stakes in Al Ahly Momken and EasyCash 

Egypt-based fintech e-Finance for Digital and Financial Investments has acquired a 25 percent stake in Al Ahly Momken and a 13 percent stake in EasyCash for Digital Payments for an undisclosed deal value. 

Founded in 2005, e-Finance is involved in the development of digital payment infrastructure and digital space to help achieve social development goals.  

Al Ahly Momken, based in Egypt, is a digital payment provider, serving over 90,000 merchants and more than 5 million customers.  

Meanwhile, EasyCash, also based in the north African country, provides payment services for individuals, merchants, and businesses. 

These acquisitions align with e-finance’s strategy to expand its footprint in the digital payments market and support Egypt’s Vision 2030 for digital transformation. 

Egypt’s OneOrder closes $16m series A round 

Egypt-based logistics startup OneOrder has raised $16 million in a series A round in a mix of equity and debt, led by Delivery Hero Ventures, with participation from Norrsken22 and existing investors, Nclude and A15. 

Founded in 2022 by Tamer Amer and Karim Maurice, OneOrder is a tech-enabled supplier and wholesale distributor that offers the food and beverages industry a supply of quality goods with embedded financing.  

The company plans to expand into the Gulf Cooperation Council region by the fourth quarter of 2024. In December 2022, OneOrder closed a seed round at $3 million. 

Jordan’s fintech liwwa takes $5m loan 

Jordan-based fintech liwwa has secured a $5 million loan from the US International Development Finance Corp.. 

Founded in 2013 by Ahmed Moor and Samer Atiani, liwwa is a peer-to-peer lending network that connects investors and small businesses through smart business loans.  

The latest cash influx will enable liwwa to finance further small and medium sized enterprises across various sectors. Liwwa’s last funding round was in 2022, when it raised $18.5 million in a pre-series B round of equity and debt. 

Egyptian investment bank EFG Hermes acquires stake in Danish wealth management firm 

Egypt’s investment bank, EFG Hermes, a subsidiary of EFG Holding, has acquired a minority stake in the Danish digital wealth manager Kenzi Wealth for an unknown value. 

The new partnership will enhance EFG Hermes’ digitalization vision. By combining EFG Hermes’ client network and Kenzi Wealth’s AI tools, EFG Hermes will be able to offer its clients a more efficient and personalized investment experience.  

Founded in 2021 by Mohamed El-Masri, Kenzi Wealth specializes in tailoring investment features to meet the needs of investors. 

Mohamed El-Masri, founder of Kenzi Wealth. Supplied

UAE’s Plain Tiger raises funding round 

UAE-based business-to-business marketplace Plain Tiger has raised an investment from UAE’s venture capital firm AngelSpark for an undisclosed amount. 

Founded in 2021 by Alexandra Polson and Oliver Baillie, Plain Tiger connects hotels with eco-friendly suppliers, saving them time, money, and reducing their environmental impact.  

The investment is part of Plain Tiger’s $1.5 million seed round, which will be used to expand into Saudi Arabia and accelerate more hotels’ pathway to net zero procurement. 

UAE’s Revent closes $900k in pre-seed round 

UAE-based electronics marketplace Revent has raised $900,000 in a pre-seed round, provided by Techstars and a group of angel investors. 

Founded in 2022 by Baldeep Singh and Dhananjay Choubey, Revent offers SMEs pre-owned devices on monthly subscriptions across the UAE and Saudi Arabia.  

The funds will be used to build a self-service platform for businesses, along with growing Revent’s client base in Saudi Arabia. 

UAE’s proptech Keyper closes $4m equity round 

UAE-based proptech Keyper has raised $4 million in equity in a pre-series A round, led by BECO Capital and Middle East Venture Partners, with participation from existing investors Vivium Holding, Jabbar Group, Signature Developers, and new investors Annex Investments, Pin Investment, and Al Qahtani Investment, among other angels. 

The company has also received an additional $30 million in Shariah-compliant sukuk financing from global asset manager Franklin Templeton Investments Ltd., bringing its cumulative capital raised to-date to over $40 million.  

Founded by Omar Abu Innab and Walid Shihabi in 2022, Keyper offers a property management platform where tenants can track their expenses and charge online, and investors get real estate portfolios and access to data-driven insights.  

Keyper will invest the fresh funds into digitizing the rental experience in the UAE and scaling its innovative rent now, pay later solution. Last October, Keyper raised a $6.5 million seed round. 

UAE’s proptech Huspy raises investment round 

The app of proptech firm Huspy. Supplied

UAE-based property technology firm Huspy has raised a fresh investment round led by Balderton Capital, with further participation from existing investor Fifth Wall, amongst other investors. 

Founded in 2020 by Jad Antoun and Khalid Ashmawy, Huspy facilitates the home buying and financing process through its online marketplace.  

The company claims that this round of funding is at a higher valuation than the $37 million series A raised in 2022. The newly acquired capital will be deployed to build a super app for real estate. 

Egypt’s proptech Birdnest raises pre-series A round 

Egypt-based proptech Birdnest has closed an undisclosed pre-series A funding round for a 20 percent stake in the company, led by Beltone Venture Capital and CI Venture Capital. 

Founded in 2020 by Mostafa El-Nahawy and Ahmed Fadda, Birdnest offers furnishing services and rental management solutions to ensure maximum returns for real estate investors and value for tenants.  

The funds are earmarked for the expansion of the regional quality team, the enhancement of proprietary technologies, and marketing initiatives to reinforce Birdnest’s market position.


Oil Updates – crude steady as investors weigh US rate fears, firmer seasonal demand

Oil Updates – crude steady as investors weigh US rate fears, firmer seasonal demand
Updated 24 May 2024
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Oil Updates – crude steady as investors weigh US rate fears, firmer seasonal demand

Oil Updates – crude steady as investors weigh US rate fears, firmer seasonal demand

SINGAPORE: Oil prices were stable on Friday as investors considered the latest comments from the US Federal Reserve on interest rates amid sticky inflation, while signs of firming seasonal US fuel demand lent support, according to Reuters.

Brent crude futures rose 2 cents at $81.38 a barrel at 6:15 a.m. Saudi time, while US West Texas Intermediate crude futures were down 1 cent at $76.86.

Both benchmarks settled at multi-month lows on Thursday, with Brent crude futures closing at their weakest point since January and US crude futures hitting a three-month low.

Brent futures were headed for weekly declines of more than 3 percent, while WTI futures were poised for a slide of nearly 4 percent from last week as ongoing macroeconomic constraints in the US held prices in the balance.

“The sore demand sentiment owing to the hawkish Fed outlook at rates and the backdrop of ‘possibly higher-for-longer rates’ weighed significantly on oil prices this week,” said Priyanka Sachdeva, a senior market analyst at Phillip Nova.

Minutes released on Wednesday from the Fed’s latest policy meeting showed policymakers questioning whether current interest rates are high enough to tame stubborn inflation.

Some officials said they would be willing to hike borrowing costs again if inflation surged. However, Fed Chair Jerome Powell and other policymakers have since said they feel further rate hikes are unlikely.

Higher rates could slow economic growth and crimp fuel demand.

Meanwhile, strengthening US gasoline demand was helping to stabilize prices ahead of the Memorial Day holiday weekend, which is considered the start of the US summer driving season.

Gasoline demand in the US reached its highest level since November, the Energy Information Administration said on Wednesday. That helped support the market as US drivers account for around a tenth of global oil demand, “making the upcoming driving season a pillar of the recovery in global demand growth,” ANZ analysts said in a note.

All eyes are now on the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, set to meet on June 1, where they are expected to discuss whether to extend voluntary oil output cuts of 2.2 million barrels per day.

“The market is also tentative about taking an aggressive positioning ahead of next week’s OPEC meeting, where supply policy will be discussed,” ANZ analysts added. 


Oil creeps back up after three days of losses

Oil creeps back up after three days of losses
Updated 23 May 2024
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Oil creeps back up after three days of losses

Oil creeps back up after three days of losses

Oil prices crept up on Thursday, clawing back some of the previous three days’ losses.

The gains were made despite the US Federal Reserve entertaining a further tightening of interest rates if inflation remains sticky, a move that could hurt oil demand.
Brent crude futures were up 92 cents, or 1.1 percent, at $82.82 a barrel by 1317 GMT. US West Texas Intermediate crude futures were 97 cents, or 1.3 percent, higher at $78.54. Both benchmarks fell more than 1 percent on Wednesday for their third straight day of losses.

Saudi crude exports
Saudi Arabia’s crude exports reached 6.41 million barrels per day in March, according to an analysis from the Joint Organizations Data Initiative.
This figure increased by 96,000 bpd, or 1.52 percent, compared to the previous month, marking a nine-month high. Furthermore, the data indicated that the Kingdom’s crude production fell to 8.97 million bpd, reflecting a monthly decrease of 0.42 percent.
This can be linked to the voluntary oil production cuts adopted by members of the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+. Saudi Arabia announced in March the extension of its 1 million bpd cut, initially implemented in July 2023, until the end of the second quarter of 2024.
The Ministry of Energy said that the Kingdom’s production will be approximately 9 million bpd until the end of June.
Meanwhile, refinery crude output, representing the processed volume of crude oil yielding gasoline, diesel, jet fuel, and heating oil, fell by 4 percent compared to the previous month, reaching 2.56 million bpd, according to JODI data.

 

 


IMF demands Pakistan secure parliamentary approval on reforms for loan agreement— official

IMF demands Pakistan secure parliamentary approval on reforms for loan agreement— official
Updated 23 May 2024
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IMF demands Pakistan secure parliamentary approval on reforms for loan agreement— official

IMF demands Pakistan secure parliamentary approval on reforms for loan agreement— official
  • Government will present “prior actions” needed to secure IMF loan in federal budget next month, says finance ministry official 
  • Leading economist says Pakistan left with no option but to secure IMF bailout to meet external financing needs of $80 billion 

ISLAMABAD: The International Monetary Fund (IMF) has asked Pakistan to seek parliamentary approval on major economic reforms related to the energy, power, tax sectors and on the privatization of state-owned enterprises (SOEs) before starting formal talks for another loan program, a finance ministry official said on Thursday. 

Facing low foreign exchange reserves, currency devaluation and high inflation, Pakistan last month completed a short-term $3 billion IMF program that helped stave off a sovereign default. However, the government of Prime Minister Shehbaz Sharif has stressed the need for a fresh, longer-term program with the global lender. 

An IMF mission reached Islamabad last week to negotiate with Pakistani authorities for a fresh bailout program, holding talks with officials on reforms in key economic sectors. The mission is wrapping up its visit today, Thursday, without reaching any staff-level agreement with Islamabad. 

The government would present the economic reforms demanded by IMF or “prior actions” in parliament in the Finance Bill 2024-25 likely to be presented on June 7, the finance ministry official with knowledge of the negotiations, said on condition of anonymity. 

“The IMF has suggested authorities to get parliamentary approval for the new loan program’s targets and conditions before initiation of the formal talks,” the official told Arab News. 

“In fact, these are the prior actions that Pakistan is required to take care of before reaching a staff-level agreement with the Fund for the new bailout package.”

The international lender has urged Islamabad to overhaul its SOEs and introduce tax, energy and power reforms. Pakistan has had to take painful measures in line with the IMF’s demands since 2022, which included hiking fuel and food prices. 

The finance ministry official said the government intends to introduce key reforms in the energy and power sectors in line with the IMF’s demands, besides broadening the tax base through progressive initiatives. 

“The government will take all parliamentary parties into confidence over the digitalization of the Federal Board of Revenue and the privatization of the SOEs,” he added. 

Sajid Amin, a senior economist and deputy executive director at the Sustainable Development Policy Institute (SDPI), said the government had “no option but to secure the IMF loan program.” He said the IMF’s program was critical in helping Pakistan meet its external financing needs of around $80 billion in the next three years. 

“The IMF wants political ownership of the loan program and that’s why it is pushing the government to get all the targets and conditions approved by the parliament,” Amin told Arab News.

“The biggest challenge for the government is to convince the coalition partners and opposition over its reforms agenda to secure the IMF loan,” he said. 

Amin warned the upcoming IMF program would be the “toughest” one for the government as it would not be easy for it to complete it.