Abu Dhabi: The latest political turmoil in Pakistan have shaken the confidence of foreign investors and will impact the economy, according to the country’s businessmen in the UAE.
Thousands of people have taken to the streets protesting against the Nawaz Sharif government in Pakistan, saying that the last year’s elections were rigged and the present government is not doing enough to fix the economy. Three people were killed and hundreds injured in the violence.
“It’s quite an uncertain situation at the moment. There is total chaos and markets are not performing well,” said Shahid Qureshi, a business development manger of UAE-based Thani Investments, which is carrying out exploration of copper mines in Baluchistan.
“Business is affected,” he said. “Everyone is concerned about it. Pakistan’s army should intervene to diffuse the crisis.”
Qureshi declined to give details about the investments made by the company in Pakistan and said that they are conducting airborne surveys to determine copper mines in the area. The company has an office in Islamabad.
Media reports said that the ongoing crisis risks jeopardising an already-tepid economic recovery and potentially complicates Pakistan’s ability to meet the terms of a $6.7 billion International Monetary Fund loan program.
The loan was given to Pakistan on conditions it institutes reforms and privatises loss-making government units.
Overall progress
The IMF in a statement on August 18 said that it is encouraged by the overall progress made in Pakistan in pushing forward with policies to strengthen macroeconomic stability and revive investment and growth.
“Economic indicators are generally improving, with growth continuing to gain momentum, inflation on a downward trajectory, and credit to the private sector rebounding sharply,” IMF said in the statement posted on its website.
Businessmen are concerned that economic recovery would be stalled if the ongoing crisis continues.
“The present government has done a good job in creating a friendly atmosphere for people to invest in Pakistan but everything is stalled now because of the protests,” said Iskander Sultan Khwaja, a UAE based businessman.
“We are concerned. There is a tremendous potential for investment in Pakistan, especially in banking sector.”
He however said that the present crisis will only have a short-term impact and the economy will bounce back to normalcy once things become better.
Tanvir Khwaja, the President of Pakistan’s Business Council, said the businessmen are dejected with the present situation.
“Total investment culture is affected because of the ongoing problem,” he said. “Signs of destabilisation hamper the investment culture.”
Quoting government figures, he said the economy has suffered a big loss to the tune of up to 800 billion Pakistani rupees.
“Nawaz Sharif has undertaken privatisation of loss-making government entities. China and a number of Arab countries are investing in Pakistan. There is a healthy growth trend in Pakistan.”
UAE is largest investor
The UAE is the largest investor in Pakistan among the Gulf Cooperation Council (GCC), according to the website of the UAE Embassy in Islamabad.
A number of UAE companies have investments in Pakistan, but none responded to Gulf News request for information regarding the situation.
Pakistan commerce minister Khurram Dastgir Khan said more than a year of efforts to fix the economy had “gone up in smoke”.
“The government has very painstakingly been building a house of international confidence, and the foundation of this was the IMF package and abiding by our reforms’ promises,” he told Reuters. “But ... our struggles of 14 months have gone up in smoke in a matter of 14 days. We are pushed to a point where we have to go back to the drawing board.”
