The Khan government’s most crucial problem is Pakistan’s depleted coffers, which require an immediate infusion of US$12 billion (over $15 billion CAD). Pakistan’s budget deficit jumped 43% to $18 billion in the fiscal year ending June 30. In mid-September there was only enough money to pay for two months of government operations.

To raise funds, Khan initially turned to Saudi Arabia, where he travelled on September 18 for his first state visit. The Saudi royal family is a close ally of Pakistan, protected by thousands of Pakistani soldiers stationed there.

Khan asked Saudi leader King Salman to join Pakistan and China in their joint infrastructure project called the China-Pakistan Economic Corridor (CPEC). CPEC is part of China’s Belt and Road Initiative (BRI), the largest infrastructure project in the world (see my March-April Monitor article), which includes more than 60 countries. The Saudi government pledged to send a delegation to Pakistan to examine the prospects of investing in CPEC.

According to the Pakistani newspaper The News,

“The Saudi delegation will finalize the details of financial assistance required by Islamabad in the form of Saudi investments in CPEC, provision of oil on deferred payment and dollar deposits in Pakistan to boost the country’s foreign exchange reserves.”

Khan also plans to ask China for financial assistance, but about US$8 billion of the US$12 billion he needs will likely come from the IMF.

Pakistan has received loans from the IMF and friendly countries in the past, but these have not relieved its deep-seated economic malaise, which stems from the country’s domination by the military and a landlord class, both of which (in collaboration) have obstructed industrialization and economic development by monopolizing national resources.

The military takes the lion’s share of national wealth including foreign loans and investment; landlords keep most of the income generated by agricultural activities. Land is still the main source of wealth inside Pakistan and most of the population lives in villages. Given this military-feudal power structure, no positive economic change such as poverty reduction can be expected.