Unable to meet its forex requirements, Pakistan’s capital Islamabad is selling its public assets to third countries. Islamabad leased four of its berths 6-9 at Karachi Port’s East Wharf to a UAE-based company for USD 220 million. Under the term of the 50-year concession agreement, the newly created Karachi Gateway Terminal Ltd. (KGTL) would manage, operate, develop port terminals and increase its capacity.
The move marks the first inter-governmental transaction under a law enacted last year to raise emergency funds. Leasing of terminal solves twin purposes. As it provides urgently needed forex, it also reduces the burden of providing forex for critical imports required for handling and developing the port.
Though Islamabad was offering its assets since last year, no one showed interest. But now one of its friendly countries, the UAE has agreed to buy an interest in Karachi port to bail out the country at a time of unprecedented forex crisis. The ongoing political and economic uncertainties had kept foreign investors out of Pakistan.
Meanwhile, Islamabad has decided to lease out the first phase of the New Islamabad International Airport to international investors. Its plan to lease out other two international airports in Karachi and Lahore faced difficulties, mainly due to nonpayment of dues by Pakistan International Airlines and other pending dues. Moreover, the Islamabad airport has ‘clean’ transactions compared to other airports. It is a general knowledge and perception that Pak public assets are not clean for businesses and investments.
Pakistan’s source funds from friendly countries which were flowing in are dried up. At present, the crisis stuck Pakistan is not getting easy loans or deposit transfers from its friendly countries. It is bracing for new challenges and adverse economic impact as one of its reliable development partners, Saudi Arabia ends its ‘blank checks’ aid strategy, marking a shift toward economic accountability for struggling states including Pakistan.
There are reports of Saudi officials getting frustrated while watching their financial assistance evaporate in struggling economies without any positive outcome. Due to this Saudi Arabia is no longer willing to bail out Islamabad and it has refused to provide ‘easy money’ to Pakistan until it implements economic reforms.
According to analysts, since the Pak economy is badly managed, the friendly countries are pressuring Islamabad to adopt IMF conditions first so that the economy could be restructured and reformed. The delay in IMF assistance is hurting the credibility of Pakistan.
Now, the Pakistan government has no option but to listen to the IMF. The National Assembly finally approved changes for the Finance Bill 2023-24, including Pakistani rupees (Rs) 215 billion in additional tax measures, a spending cut (Rs 85 billion) and the power to increase the petroleum levy from Rs50 to Rs 60/litre, among other criteria. The budget was approved under the tight watch of the IMF in an attempt to secure pending funds. Now the government expects a breakthrough to get direly needed bailout funds.
