ISLAMABAD: Finance Minister Muhammad Aurangzeb reassured that Pakistan’s economy would not be significantly impacted by the recent military escalation with India, stating that the government can manage the situation within the existing fiscal framework. In an interview with Reuters, he emphasized that there was no immediate need for a new economic assessment following the conflict.
Aurangzeb highlighted that trade talks with the United States, which helped broker the ceasefire, were likely to make swift progress. He also mentioned that Pakistan was exploring options to import more cotton and soybeans, and was looking into other sectors such as hydrocarbons.
US President Donald Trump confirmed that the US is ready to assist both India and Pakistan after the ceasefire, pointing out that trade was a significant factor in the de-escalation. Pakistan’s exports to the US are currently subject to a 29% tariff, which is temporarily paused for 90 days as announced in April.
The IMF approved a $1 billion loan for Pakistan as part of a larger $7 billion bailout package, with Aurangzeb confirming that Pakistan would receive the disbursement on Tuesday. The IMF also approved an additional $1.4 billion loan under its climate resilience facility.
Regarding the federal budget for the upcoming fiscal year, the finance minister stated that budget discussions with the IMF would take place from May 14 to 23, with the budget expected to be finalized within the next few weeks. He also described the India-Pakistan conflict as a “short-duration escalation” that can be managed without significantly affecting the economy.
Aurangzeb addressed concerns about potential increases in military spending, stating that while it was premature to discuss specifics, the government would ensure that defense needs are met. He also expressed confidence that the Indus Water Treaty, which India had suspended, would be reinstated without immediate consequences.
