Pakistan’s recent military flare-up with India is unlikely to significantly affect the country’s finances and can be managed within the existing fiscal framework, Finance Minister Muhammad Aurangzeb told Reuters in an interview on Monday.
Aurangzeb characterized the conflict as a “brief escalation” and assured that it would have only a minor financial impact, stating that “it can be accommodated within the fiscal space available to the government of Pakistan.” He added that no new financial assessments are required in light of the situation.
On potential increases in military expenditure in the upcoming budget, Aurangzeb declined to provide specifics, noting it was too early for detailed discussion. Nonetheless, he affirmed that Pakistan would meet all necessary defense needs: “Whatever we need to do in terms of ensuring that our defence requirements are met will be met.”
The finance minister also discussed trade developments, especially with the United States, which played a critical role in brokering a ceasefire between India and Pakistan. He noted that trade negotiations with the U.S. could move forward quickly, and that Pakistan was looking to import higher-quality cotton and soybeans. He also hinted at interest in other sectors, including hydrocarbons.
Regarding the Indus Waters Treaty—which India recently suspended unilaterally—Aurangzeb expressed confidence that the treaty would be reinstated. He emphasized that Pakistan is not considering any scenario that does not involve the treaty’s restoration.
U.S. President Donald Trump, who mediated the ceasefire, commented earlier that trade incentives played a key role in ending hostilities between the two countries.
Pakistan currently faces a 29% tariff on exports to the U.S. due to a roughly $3 billion trade surplus, but this has been paused for 90 days under a suspension announced in April.
Aurangzeb also confirmed that the International Monetary Fund (IMF) had approved a $1 billion disbursement to Pakistan as part of a broader $7 billion bailout program. Pakistan is expected to receive these funds on Tuesday. Additionally, the IMF has approved a separate $1.4 billion loan under its climate resilience initiative.
The finance minister said the federal budget for the next fiscal year, beginning in July, will be finalized in three to four weeks. Budget discussions with the IMF are scheduled for May 14–23.
Tensions between India and Pakistan escalated after a deadly April 22 attack in Indian-occupied Kashmir killed 26 people, triggering the most intense military standoff between the two countries in over two decades. A ceasefire was declared Saturday after four days of fighting and diplomatic efforts led by the U.S.
