FinMin says India tensions won’t strain budget

May 13, 2025 (MLN): Pakistan’s recent military escalation with India will have minimal fiscal impact and can be managed within the current budgetary framework, Finance Minister Muhammad Aurangzeb stated.

He clarified there was no need for a revised economic outlook in response to the short-lived conflict.

In an online interview with Reuters, Aurangzeb expressed confidence in advancing trade discussions with the United States, which had played a pivotal role in brokering a ceasefire between the two South Asian nations.

He said that progress was likely to be made “in short order,” with Pakistan aiming to import more high-quality cotton and soybeans, while also evaluating new sectors like hydrocarbons.

Following the ceasefire, U.S. President Donald Trump noted on Monday that trade had played a major role in halting the fighting and reiterated Washington’s willingness to assist both countries.

Currently, Pakistan faces a 29% tariff on exports to the U.S. due to a $3 billion trade surplus. However, this is under a 90-day suspension that began in April, offering a temporary reprieve for Pakistani exporters.

Aurangzeb also confirmed that Pakistan is set to receive a $1bn disbursement from the International Monetary Fund (IMF) on Tuesday, part of a broader $7bn bailout package.

In addition, the IMF has approved a new $1.4bn loan for Pakistan under its climate resilience facility, as Reuters reported.

Budget planning for the next fiscal year, starting in July, is underway and expected to be finalized within three to four weeks.

Talks with the IMF concerning the budget are scheduled from May 14 to 23.

On military spending, Aurangzeb refrained from detailing allocations in the upcoming budget, stating it was too early for specifics.

Nonetheless, he assured that Pakistan’s defense needs would be met as required.

Addressing India’s unilateral suspension of the Indus Waters Treaty, Aurangzeb voiced confidence that the agreement would be reinstated, emphasizing that Pakistan does not foresee any scenario excluding the treaty’s restoration.

Tensions had flared following an April 22 attack in Indian-administered Kashmir that killed 26 Hindu tourists, triggering the most intense India-Pakistan clashes in over 20 years.

A ceasefire was declared on Saturday after four days of fighting, with diplomatic efforts led by the United States playing a crucial role.

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