From Deposits to Deals: What the New Pakistan-Saudi Investment Fund Can and Cannot Do

The Saudi-Pakistan Joint Business Council (SPJBC) was established by the two governments on 9 November 2026 to advance private-sector trade and investment between the two countries through a private equity fund. The council stated that its first expansion was at “multi-hundred million” dollars and would continue to expand as “opportunities [come] up” in different sectors. Three-quarters (75 per cent) of the money is to be allocated for projects in Pakistan while the remaining one-quarter (25 per cent) for projects in Saudi Arabia.

In theory it's a small statement. Pakistan has never been given these big numbers in Saudi investments before, the first being a pledge of $25 billion under the Special Investment Facilitation Council (SIFC) and the second being a commitment by leaders in 2024 to accelerate the first tranche of $5 billion. However, there is one crucial difference in the fund. It isn't a loan to the state, a reserve deposit to boost reserves. It is private money that is looking for profit in return. Its success or failure will prove to be a reflection of the economic health of Pakistan, rather than any rollover ever.

How the fund came about

The fund has been created through regular contact for a year. In August, the Saudi business delegation headed by SPJBC Chairman Prince Mansour bin Mohammad Al Saud met the Pakistani PM Shehbaz Sharif who stated that the Saudi nation was keen to establish the relationship as a "mutually beneficial strategic economic partnership" as espoused by the Crown Prince Mohammed bin Salman. In October, Prince Mansour returned with a high level delegation meeting with political leaders and senior officials, as well as chambers of commerce and business groups.

Saudi is considering sectors, agriculture, ports, highways, outsourcing of the airport, real estate, energy, power distribution and information technology. Islamabad offered Saudi investors to finance the long delayed Sukkur-Hyderabad Motorway (M-6) and two other highway projects in June. The two governments, on 30 August, also released a joint statement to increase Pakistan's agriculture and food exports to the kingdom to $3 billion in two years.

These are those areas in which the delegation has expressed interest, and not necessarily a list of investments in the fund. The council has not yet shared the name or the manager of the fund, the amount of the fund or its selection of projects.

A relationship that runs on support, not trade

The shape of the relationship today is why a private fund is important. The trade value in FY 25-26 was approximately $4.75 billion between the two countries. About $4.06 billion of this was Pakistani imports, primarily oil and petroleum products, while only approximately $0.7 billion was Pakistan's exports. Trade activity has hardly picked up over the past two years and exports in Pakistan declined marginally.

There are other forms in which money does flow towards Pakistan. In 2025-26, Saudi Arabia remained the biggest source of workers' remittances, with a remittance outflow of approximately $9.78 billion, out of a total record of $41.6 billion. Reserves have been built up year after year through rollover of Saudi deposits at the State Bank and delayed oil payments have helped to reduce the import bill. The Strategic Mutual Defence Agreement was signed by the two countries in September 2025, where an attack on one is considered an attack on the other.

It's a deep relationship, but a one-sided one. Pakistan provides labour, and, more and more, security guarantees; it gets remittances, oil, and financial aid. What is missing is a commercial relationship of equals, a relationship based on profit and not on solidarity, a Saudi money coming for profit. That's the space the new fund is intended to fill.

Why private capital is a harder test

Government deposits are a matter of politics. They can be prepared in one leader meeting. The private equity fund is quite different. Its managers need to identify projects that have a legitimate return, value them and have the confidence that they will be able to sell off their investments at some point in the future. All of these measures set a direct course for Pakistan's common flaws.

Policy instability is the first. For investors in power distribution, airports or motorways, tariffs, concession terms and tax rules should not vary from one budget to the next and from one government to another. The second one is the exit problem. A private equity firm realizes its gains upon sale, and Pakistan's narrow stock market and the frequent currency crises make that difficult compare to most emerging markets. The third is dispute resolution. Foreign investors are hesitant to invest in big assets because of the long delays in court proceedings and the history of projects that have been litigated, including Reko Diq.

This is also the reason why pledges have been made much faster than they were to be delivered. The $25 billion SIFC is a long-term investment and no public reporting has been provided to track the amount of it that has reached. This is a few hundred million dollars, which is a relatively small sum, but it is tangible. The first ones will tell me if it's possible to get projects out of earlier promises.

Where the fund could make a difference

The most promising sector is food and agriculture since it can be directly connected to the $3 billion export goal. In 2025, around 169,000 tonnes of rice valued at $163 million and approximately 30,000 tonnes of red meat valued at $167 million were exported to Saudi Arabia. It would take a lot of real sales to reach $3 billion. This will require investments in cold chains, certified meat processing, fodder manufacturing, water saving agriculture and testing laboratories that adhere to Saudi food safety regulations. They are projects of a medium scale that generate export revenues and are the type a private equity fund is designed to finance.

Infrastructure is the second area. Steady revenue with dollar linkages can be generated from ports, motorways and airport services when they are operated under clear concession contracts. For instance the M-6 motorway would connect Karachi with the north and reduce the expenses of goods transportation to the coast. Information technology is a third sector, where Pakistani companies can participate in the big digital projects under the Saudi Vision 2030.

The quarter of the funds allocated for the Saudi projects should also be highlighted. It enables the Pakistani companies to invest in the kingdom instead of only sending labour to it via joint ventures. When Pakistani construction, engineering or software firms get into Saudi projects, the relationship starts shifting from remittance to company profits.

The risks to watch

There are cautions, too. The fund is relatively small, and the number of dollars is loosely described; a "multi-hundred million" dollar fund can accomplish a few big transactions, not wreak world-changing havoc. Transparency is also an issue. If it is a government-sponsored council, a fund set up through it should disclose who is in charge, how projects are selected and what benefits members can look forward to, or it could be another avenue for the projects of those who have political connections.

Adding to the uncertainty is the regional environment. The fund was created as the ongoing months-long tensions between the United States and Iran threatened to stall. Unstability in the Gulf can cause the rise in oil prices, risk to Pakistani workers and increased caution of investors in the region. Last, don't forget the focus on Saudi capital over the investments that every investor should be making. Whatever they get from the financial systems, it will be subject to the same principles: stable policies, enforceable contracts, currency that doesn't go out or out of style every few years.

The way forward

The fund should be seen as a 'test case' for Pakistan. Before the managers of the SIFC approach them, the SIFC and the Board of Investment should make a short list of agriculture, logistics and IT projects that can be banked, with feasibility studies complete, land titles established and agreed tariffs. More capital will come in than there will be memorandums of understanding.

Secondly, agricultural deals must be based on the export target. Projects should be assessed on the basis of their contribution to Pakistan's sales to Saudi Arabia, rather than how 'sounding' they are. Thirdly, the government should resolve disputes promptly and honor the contract concluded by preceding governments. Last but not least, Pakistan should flip the script on the relationship – from asking for deposits to providing returns.

The Pakistan-SAE economic relationship, until now, has been gauged on the extent of support that Riyadh was prepared to offer. This fund raises another question: What can Pakistan make profit of? The answer to it if it is answered well will do more for economic independence for the country than any rollover.

For CSS and PMS aspirants

It is a key topic with relevance to Current Affairs, Pakistan Affairs, International Relations and Economics and can be included in essays on economic diplomacy and foreign investment. It can be referred to for answers to questions regarding Pakistan's relations with the Gulf countries, the SIFC, foreign direct investment, balance of payments or food security. An effective thesis is the transition from aid to investment: Pakistan's relationship with Saudi Arabia has always been based on deposits, oil facilities and remittances, but the new fund will test whether it's based on commercial returns. Be specific with numbers: Beyond "multi-hundred million" dollars, little else has been released about the size of the fund, and $3 billion is an export target without a purchase commitment.