India and Pakistan Increasing tension between India will not create any major economic obstruction. However, this will be a shock to Pakistan as it may bring its foreign exchange reserves under pressure and affect its growth rate. The rating agency Moody’s Ratings released the report on Monday from the title ‘Impact on Pakistan’s growth due to increasing stress between India and Pakistan’. It said that he does not see any major disruption in India’s economic activities because its economic relations with Pakistan are very minor. In 2024, its stake in India’s total exports was less than 0.5 percent.
Government’s current fiscal consolidation will be obstructed
Moody’s said, “Increased stress with India will affect Pakistan’s growth and the government’s existing fiscal consolidation will be interrupted, which will disrupt Pakistan’s progress to achieve comprehensive economic stability.” It also needs to be noticed that Pakistan’s large economic condition is improving, growth rate is increasing gradually, inflation is increasing and there is also continuous progress in the foreign currency reserves. Moody’s said, “The continuous increase in stress can disrupt Pakistan’s outdoor access to external financeing and it may put pressure on the foreign exchange reserves which is much lower than the level required to meet the needs of its external debt payment for the next few years.”
IMF Executive Board will meet Pakistani officials on 9 May
The Executive Board of the International Monetary Fund (IMF) is scheduled to meet Pakistani officials on 9 May, which will evaluate a new -US $ 1.3 billion for Pakistan under the Climate Change Debt Program. It will also evaluate the existing $ 7 billion ‘relief’ package. Sources said that India will ask global multilateral agencies including IMF to re -examine the funds and loans given to Pakistan.
Large economic conditions will remain stable in India
Moody’s said that large economic conditions in India will remain stable, which will be slow between strong public investment and healthy personal consumption but still stronger than high level growth. The rating agency said, “In the scenario of continuous increase in local tension, we do not see a possibility of major disruption in India’s economic activities, as India’s economic relations with Pakistan are very minor. However, high defense spending will potentially put weight on India’s fiscal strength and slow down its fiscal consolidation. ‘
With PTI inputs
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