Pakistan calls for reset in South Asia as dialogue with India hits 11-year freeze

Pakistan’s Deputy Prime Minister Ishaq Dar addresses the “Islamabad Conclave 2025” at the Institute of Strategic Studies in Islamabad, Pakistan, on December 3, 2025. (ISSI)
Short Url
Updated 03 December 2025
Follow

Pakistan calls for reset in South Asia as dialogue with India hits 11-year freeze

  • Deputy PM criticizes SAARC’s paralysis, says rising climate pressures require renewed regional cooperation
  • Ishaq Dar speaks in favor of multilateralism, warns that states are using force in disregard of international law

ISLAMABAD: Pakistan’s Deputy Prime Minister Ishaq Dar on Wednesday urged a “reimagining” of South Asia’s fractured regional architecture, saying an 11-year freeze in dialogue with India was undermining prospects for long-term stability and peace in one of the world’s most volatile regions.

India and Pakistan fought a brief but intense military clash in May this year in which both nuclear-armed neighbors exchanged missiles, artillery fire and deployed fighter jets. The standoff lasted about four days before the United States brokered a ceasefire, saying the two sides had agreed to talk.

While Pakistan continued to call for a “composite dialogue” to resolve all outstanding disputes, India declined to proceed with negotiations.

Dar made the remarks while addressing the Islamabad Conclave 2025, a two-day gathering focused on security, economy, climate and connectivity in South Asia.

“The end of Cold War largely bypassed South Asia, leaving the region with few peace dividends,” Dar said while addressing the gathering. “We, the South Asians, need to think really hard. Are we doomed to remain mired in confrontation and conflict while other regions progress and prosper? The answer should be a clear no.”

He noted the region had weak conflict management and dispute resolution institutions, pointing out that “structured dialogue process between India and Pakistan remains stalled for over 11 years.”

Dar said South Asia’s fragmented political landscape, economic vulnerabilities and climate pressures had made cooperation increasingly urgent, warning that rising temperatures, extreme weather events and glacial melt were threatening water security, agriculture and livelihoods across the region.

He said the cumulative challenges of security, economic fragility and climate change were “too grave to disregard” and could not be effectively tackled without a more functional regional architecture.

He also criticized the paralysis of the South Asian Association for Regional Cooperation (SAARC) which has remained largely inactive for more than a decade, saying “artificial obstacles” must be removed to allow the organization to resume its role as a platform for economic cooperation.

Dar pointed to new trilateral initiatives, including one between Pakistan, China and Bangladesh, as examples of how smaller regional groupings could advance connectivity and collaboration where broader institutions had stalled.

Calling for South Asia to move beyond “zero-sum mindsets,” the deputy prime minister said the region needed dialogue, peaceful coexistence and economic interdependence, adding that open and inclusive regionalism remained essential for sustainable peace.

He maintained Pakistan envisioned a South Asia “where connectivity replaces divisions” and where disputes were resolved in accordance with international legitimacy.

Dar said the region would only realize its economic and political potential if all countries committed to cooperation.

He also spoke in favor of multilateralism, saying the world was witnessing growing military conflicts as states increasingly resorted to the use of force to settle disputes, showing disregard for international law and the principles of the UN Charter.


IMF warns against policy slippage amid weak recovery as it clears $1.2 billion for Pakistan

Updated 11 December 2025
Follow

IMF warns against policy slippage amid weak recovery as it clears $1.2 billion for Pakistan

  • Pakistan rebuilt reserves, cut its deficit and slowed inflation sharply over the past one year
  • Fund says climate shocks, energy debt, stalled reforms threaten stability despite recent gains

ISLAMABAD: Pakistan’s economic recovery remains fragile despite a year of painful stabilization measures that helped pull the country back from the brink of default, the International Monetary Fund (IMF) warned on Thursday, after it approved a fresh $1.2 billion disbursement under its ongoing loan program.

The approval covers the second review of Pakistan’s Extended Fund Facility (EFF) and the first review of its climate-focused Resilience and Sustainability Facility (RSF), bringing total disbursements since last year to about $3.3 billion.

Pakistan entered the IMF program in September 2024 after years of weak revenues, soaring fiscal deficits, import controls, currency depletion and repeated climate shocks left the economy close to external default. A smaller stopgap arrangement earlier that year helped avert immediate default, but the current 37-month program was designed to restore macroeconomic stability through strict monetary tightening, currency adjustments, subsidy rationalization and aggressive revenue measures.

The IMF’s new review shows that Pakistan has delivered significant gains since then. Growth recovered to 3 percent last year after shrinking the year before. Inflation fell from over 23 percent to low single digits before rising again after this year’s floods. The current account posted its first surplus in 14 years, helped by stronger remittances and a sharp reduction in imports. And the government delivered a primary budget surplus of 1.3 percent of GDP, a key program requirement. Foreign exchange reserves, which had dropped dangerously low in 2023, rose from US$9.4 billion to US$14.5 billion by June.

“Pakistan’s reform implementation under the EFF arrangement has helped preserve macroeconomic stability in the face of several recent shocks,” IMF Deputy Managing Director Nigel Clarke said in a statement after the Board meeting.

But he warned that Islamabad must “maintain prudent policies” and accelerate reforms needed for private-sector-led and sustainable growth.

The Fund noted that the 2025 monsoon floods, affecting nearly seven million people, damaging housing, livestock and key crops, and displacing more than four million, have set back the recovery. The IMF now expects GDP growth in FY26 to be slightly lower and forecasts inflation to rise to 8–10 percent in the coming months as food prices adjust.

The review warns Pakistan against relaxing monetary or fiscal discipline prematurely. It urges the State Bank to keep policy “appropriately tight,” allow exchange-rate flexibility and improve communication. Islamabad must also continue raising revenues, broadening the tax base and protecting social spending, the Fund said.

Despite the progress, Pakistan’s structural weaknesses remain severe.

Power-sector circular debt stands at about $5.7 billion, and gas-sector arrears have climbed to $11.3 billion despite tariff adjustments. Reform of state-owned enterprises has slowed, including delays in privatizing loss-making electricity distributors and Pakistan International Airlines. Key governance and anti-corruption reforms have also been pushed back.

The IMF welcomed Pakistan’s expansion of its flagship Benazir Income Support Program, which raises cash transfers for low-income families and expands coverage, saying social protection is essential as climate shocks intensify. But it warned that high public debt, about 72 percent of GDP, thin external buffers and climate exposure leave the country vulnerable if reform momentum weakens.

The Fund said Pakistan’s challenge now is to convert short-term stabilization into sustained recovery after years of economic volatility, with its ability to maintain discipline, rather than the size of external financing alone, determining the durability of its gains.