Federal Finance Minister Muhammad Aurangzeb has described the economic effects of Pakistan’s recent military confrontation with India as “minor” and well within the country’s fiscal limits. In an interview with Reuters, the minister emphasized that the skirmish has not disrupted the broader economic agenda.
“The financial impact of the skirmish is not significant. It can be absorbed within the fiscal space available,” Aurangzeb stated, affirming that Pakistan can meet its defence needs without compromising economic reforms. He declined to speculate on any possible increase in defence spending in the upcoming federal budget.
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The escalation followed the April 22 Pahalgam attack, for which India blamed Pakistan — an allegation Islamabad firmly denied. Pakistan’s subsequent military response, Operation Bunyan-un-Marsus, targeted strategic Indian military assets. A US-brokered ceasefire was reached soon after, with President Trump playing a key role in mediating the agreement.
Aurangzeb welcomed Trump’s involvement and expressed confidence in upcoming trade negotiations with Washington. He also called for the restoration of the Indus Waters Treaty, underscoring the river’s critical role in Pakistan’s economy.
On the financial front, the IMF has approved a $1 billion tranche and sanctioned a new $1.4 billion loan for climate resilience. Aurangzeb confirmed that federal budget discussions with the IMF will begin on May 14 and continue through May 23.
