KARACHI/ISLAMABAD: The recent military escalation with arch-rival India won’t have a large fiscal impact on Pakistan and can be managed within the current fiscal space, with no need for a new economic assessment, Pakistan’s Finance Minister said in an interview with Reuters on Monday.
Trade talks with the United States – which had played a key role mediating a ceasefire between the two countries – would likely have progress in “short order” and that Pakistan could import more high-quality cotton, more soy beans and was also exploring other asset classes, including hydrocarbons, Finance Minister Muhammad Aurangzeb said in the online interview.
On Monday, US President Donald Trump said the US is ready to help India and Pakistan after a ceasefire agreement, claiming trade was a big reason they “stopped fighting.”
Pakistan faces a 29 percent tariff on exports to the US due to an approximate $3 billion trade surplus, but this is currently under a 90-day pause announced in April.
The International Monetary Fund (IMF) on Friday approved a $1 billion loan disbursement to Pakistan as part of a larger $7 billion bailout agreement.
Aurangzeb said Islamabad would receive the tranche disbursement on Tuesday.
The IMF executive board also approved a fresh $1.4 billion loan to Pakistan under its climate resilience facility.
The federal budget for the next fiscal year, starting July, will be finalized within the next three to four weeks, with scheduled budget talks with the IMF to take place from May 14-23, he said.
Regarding the India-Pakistan conflict, Aurangzeb described it as a “short duration escalation” with minimal fiscal impact, stating it can be “accommodated within the fiscal space which is available to the government of Pakistan.”
When questioned about potential increased military spending in the upcoming budget, Aurangzeb deferred comment, saying it was premature to discuss specific plans. However, he said: “Whatever we need to do in terms of ensuring that our defense requirements are met will be met.”
Aurangzeb said he expects the Indus Water Treaty, which India unilaterally suspended, to be reinstated and rolled back to where it was.
He said there is not going to be any immediate impact from India’s suspension and Pakistan does not “even want to consider any scenario which does not take into account the reinstatement of this treaty.”
Tensions between India and Pakistan began mounting after the April 22 attack in Indian-administered Kashmir on Hindu tourists that killed 26 people, sparking the worst clashes between the nuclear-armed neighbors in more than two decades.
On Saturday, a ceasefire in the Himalayan region was announced by Trump, following four days of fighting and diplomacy and pressure from Washington.
Pakistan finance minister says conflict with India won’t have large fiscal impact
https://arab.news/49gng
Pakistan finance minister says conflict with India won’t have large fiscal impact
- On Monday, US President Donald Trump said the US is ready to help India and Pakistan after a ceasefire agreement
- Pakistan faces a 29 percent tariff on exports to the US due to a $3 billion trade surplus, currently under a 90-day pause
US says trade with Pakistan could top $8 billion in 2025
- US chargé d’affaires links rising trade to deeper economic engagement with Pakistan
- Visit comes amid broader effort by Islamabad and Washington to improve bilateral ties
ISLAMABAD: Trade between the United States and Pakistan is projected to exceed $8 billion in 2025, the US Embassy said on Tuesday, as Washington signaled confidence in Pakistan’s export base and economic potential during a high-profile visit to the industrial city of Sialkot.
The projection was highlighted by US Chargé d’Affaires Natalie A. Baker during meetings with Pakistani exporters and business leaders, underlining the importance Washington places on trade, investment and supply-chain cooperation as the two countries seek to stabilize and expand their economic relationship.
“Highlighting the growth in trade between the United States and Pakistan, which was projected to reach over $8 billion in 2025, Baker said, ‘Expanding trade reflects a strong foundation that highlights the positive impact of US economic engagement in Pakistan and globally. The United States and Pakistan are pursuing a fair and balanced trade relationship that creates prosperity for both our nations’,” the US embassy said in a statement.
The envoy said the United States had been Pakistan’s largest export market and a leading investor, presenting significant opportunities for expanded trade and shared prosperity.
“The United States remains deeply invested in Pakistan and its people,” Baker said, “building on a partnership that dates back to Pakistan’s independence and continues to grow through trade, innovation, education, and cultural exchange.”
The visit comes amid a broader effort by Islamabad and Washington to improve bilateral ties under US President Donald Trump’s second term, after years of uneven engagement. Since mid-2025, the two sides have stepped up diplomatic contacts, including meetings between Prime Minister Shehbaz Sharif, Pakistan’s military leadership and US officials, alongside discussions on trade, minerals, security cooperation and regional stability.
Pakistan has also sought to re-energize economic diplomacy with Washington as it works to boost exports, attract foreign investment and stabilize its economy under an IMF-backed reform program.
In July 2025, the two countries agreed to a bilateral trade deal that included reciprocal tariff reductions and frameworks for US investment in Pakistan’s energy and mineral sectors, a step Islamabad has hailed as opening new avenues for economic collaboration.
During her visit, Baker toured leading exporters including Forward Sports, First American Corporation (FAC) and CA Sports, companies that are deeply embedded in global supply chains. The embassy said nearly 70 percent of FAC’s exports go to the United States, illustrating sustained US consumer demand for Pakistani-made goods.
Baker also visited Sialkot International Airport and met with the leadership of AirSial, highlighting private-sector-led infrastructure and logistics as key to Pakistan’s export growth.
