Global Dealmaker, Ruin Within: Pakistan’s Jugular Vein (PoK) Rebellion, Pakistan’s Brutal Split

Pakistan under Field Marshal Asim Munir embodies a paradox that is both striking and dangerous. Abroad, it presents itself as a broker of global instability, mediating conflicts and offering corridors of connectivity. At home, however, it remains coercive, repressive, and deeply fragile, according to an analysis by The Print.

This duality has defined the state for decades, with the military’s ideology preferring perpetual risk over compromise. The consequences are stark. In 2025, Pakistan recorded 3,417 violence-linked fatalities, a 34 per cent increase from the previous year, marking its worst security record in a decade.

Khyber Pakhtunkhwa and Balochistan accounted for more than 96 per cent of these deaths. Economically, the country grew by 3.7 per cent in FY2025-26, but remains trapped inside a $7-billion IMF program, with public debt hovering at 68.5 per cent of GDP. Diplomatic agility thus coexists uneasily with structural fragility.

The current crackdown in Pakistan-occupied Kashmir illustrates this contradiction most brutally. The Jammu Kashmir Joint Awami Action Committee began in 2023 with demands for cheaper flour, electricity priced against locally generated hydropower, and an end to elite privileges.

Its agenda has since expanded to demand abolition or restructuring of the 12 assembly seats reserved for refugees living elsewhere in Pakistan. These seats, 12 of 45 directly elected and 12 of the 53-member House, are seen by protesters as a mechanism for Islamabad to engineer governments in Muzaffarabad. 

Islamabad, unwilling to relinquish this control, has branded the protesters “state-enemies.” Casualty figures remain contested due to communications blackouts. Reuters conservatively estimated around 30 deaths since June, while JAAC alleges dozens more dead and hundreds wounded.

The political gravity of this revolt is undeniable. Baloch and Pashtun dissent has long been dismissed by the Punjabi establishment as peripheral. But Kashmir is different. Pakistan has spent decades portraying it as its shah rag, or jugular vein. When the supposed vein itself rejects the centre’s control, the metaphor collapses into absurdity.

India has sharpened its response, particularly after Defence Minister Khwaja Asif accused Indian agencies of backing JAAC. New Delhi’s legal position remains rooted in the unanimous 1994 Parliament resolution demanding Pakistan vacate the occupied territories.

Gilgit-Baltistan, however, was largely absent from Indian discourse until Rajnath Singh’s 2022 declaration that India’s journey to resolve Kashmir would only be complete after “reaching Gilgit and Baltistan.” Even now, many Indians conflate Gilgit-Baltistan with so-called Azad Kashmir, overlooking their distinct institutions, populations, and grievances.

This distinction is critical because it is where China enters the picture. Gilgit-Baltistan forms the northern throat of the China Pakistan Economic Corridor. The Karakoram Highway enters Pakistan from Xinjiang through Khunjerab, traverses Punjab and Sindh, and ends at Gwadar in Balochistan. 

China has already seen its interests attacked from Gwadar to Dasu, where five engineers were killed in 2024. Instability now shadows the northern corridor as well. A 68-day traders’ protest halted Khunjerab traffic in 2025, and in 2026 electoral and dam-compensation protests blocked the highway again.

Financially, Beijing’s investments are complex. The CPEC portfolio is valued above $60 billion, mixing commitments, loans, and private power projects. Yet it is far from complete. One assessment counted only 38 of nearly 90 proposed projects finished, with 23 under construction and roughly a third untouched. Analysts such as Andrew Small have described China as Pakistan’s greatest economic hope and trusted military partner.

This logic explains why CPEC might still prevail. In 2025, the two sides launched CPEC 2.0, promising five corridors—growth, livelihood, innovation, green development, and regional connectivity—alongside realignment of the Karakoram Highway, new industrial zones, and the delayed ML-1 railway.

Despite chronic instability, China is unlikely to abandon this route or its access to the Arabian Sea. Persistent violence may instead push Beijing towards a more visible security posture: deeper intelligence coordination, hardened enclaves, private protection, and perhaps eventually an official outpost. Such a development would concern both India and the United States.

Yet fears of Pakistan’s “Balkanisation” remain improbable. China, Turkey, the US, Gulf financiers, and Pakistan’s army all have strong incentives to prevent state fracture, even if domestic reforms and strategic course corrections are indefinitely postponed.

For India, the reality is clear. Pakistan will remain flailing, punching above its weight internationally while cracking down internally. It will regenerate cross-border infiltration into India as a survival tactic. Pakistan is neither a miraculous winner of global instability nor an imminent ruin.

It is a state monetising disorder while being consumed by disorder; mediating wars overseas while militarising politics at home; offering corridors to others while closing roads to its own citizens. In today’s upended order, muddles can become leverage and puddles may reflect grand ambition.

But no performance can indefinitely reconcile mediation abroad with repression within. Eventually, the mountains return the echo.

Agencies

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Pakistan Seeks $10 Billion US Currency Backstop Amid Diplomatic Push

Pakistan has formally requested a $10 billion exchange stabilisation facility from the United States, a move that could provide critical relief to its strained reserves and embattled currency.

The request was made to US Treasury Secretary Scott Bessent and seeks a bilateral facility with a maturity of up to five years. If approved, this would represent a rare US Treasury backstop, routed through the Exchange Stabilisation Fund, and would serve as a liquidity lifeline while signalling closer political and economic ties between Washington and Islamabad.

The timing of the request follows Pakistan’s heightened diplomatic profile after brokering talks during the Iran war. Islamabad appears keen to convert its mediation role into tangible economic gains, leveraging its engagement with the Trump administration.

The facility would ease pressure on the rupee, reduce reliance on multilateral financing, and complement Pakistan’s ongoing IMF program, which has already demanded politically difficult reforms such as tax increases and spending restraint.

Pakistan remains under a $7 billion IMF program, with additional loans including a $1.3 billion resilience package for climate and disaster preparedness. Despite these inflows, its reserves remain vulnerable to external shocks and dependent on bilateral deposits from China and Saudi Arabia.

In April, Pakistan had to repay $3.5 billion to the United Arab Emirates, amounting to one-fifth of its reserves, before Saudi Arabia stepped in with $3 billion in support. The central bank has projected reserves could reach $20 billion by the end of 2026, close to their 2021 peak, but this depends heavily on continued external financing.

Exchange stabilisation facilities are distinct from the permanent dollar swap lines maintained by the US Federal Reserve with major central banks. They are rare instruments, with Argentina’s 2025 package being the first new operation since Uruguay in 2002, aside from Mexico’s long-standing swap line dating back to the 1940s.

For Pakistan, securing such a facility would not only provide liquidity but also carry significant political weight, reinforcing its ties with Washington at a time of regional volatility.

Global ratings agency Fitch recently noted that Pakistan’s adherence to IMF-backed reforms has supported its funding capacity and rebuilt foreign exchange buffers.

However, Fitch also warned that rising energy costs and potential supply disruptions could erode reserves. Foreign investment remains limited due to recurring crises, policy uncertainty, security risks, and a narrow export base. Pakistan’s credit rating remains deep in speculative-grade territory, keeping borrowing costs high and restricting market access.

Islamabad has sought to broaden cooperation with the Trump administration beyond traditional finance. It has signed a stable-coin agreement for cross-border payments with World Liberty Financial, a crypto business linked to President Trump’s family.

It has also pursued redevelopment of the Roosevelt Hotel in New York through a memorandum of understanding with the US government and courted American mining investment, including in the Reko Diq project, where the US Export-Import Bank has announced $1.2 billion in financing. These initiatives reflect Pakistan’s attempt to recast ties with Washington, combining diplomacy, financial stabilisation, and investment partnerships.

The $10 billion request, if granted, would mark a turning point in Pakistan’s economic trajectory, offering both immediate relief and a symbolic deepening of its relationship with the United States. It underscores Islamabad’s strategy of leveraging geopolitical engagement for economic survival while navigating the constraints of IMF discipline and regional instability.

Agencies

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India Shields Consumers From Oil Shock As Gita Gopinath Urges Targeted Support

India’s government has cushioned households and businesses from the full brunt of the West Asia oil shock by limiting fuel price hikes, effectively creating an implicit subsidy.

Gita Gopinath, former IMF Deputy Managing Director, has praised this shield but urged a shift toward targeted support for vulnerable groups as oil prices remain elevated and growth risks intensify.

The government’s decision not to fully pass on the surge in international crude oil prices to consumers has acted as a stabilising measure.

Retail fuel prices have risen only moderately compared to the steep climb in global benchmarks, ensuring that households and companies are not overwhelmed by sudden cost escalations. Gopinath described this restraint as an implicit subsidy, noting that India’s pass‑through of global oil prices has been far lower than in many other economies.

This has provided immediate relief to consumers and businesses, helping sustain demand and preventing sharper inflationary pressures.

She emphasised, however, that while shielding consumers is beneficial in the short term, broad‑based subsidies can distort the economy. Instead, she recommended that future policy should allow more of the global price increase to filter through, while simultaneously deploying targeted support.

Vulnerable households, small businesses, and sectors most exposed to energy costs should receive direct assistance. This approach would ensure relief reaches those who need it most, while avoiding inefficiencies created by artificially low fuel prices across the board.

Gopinath warned that elevated oil prices are likely to persist well into next year, with crude expected to remain above $100 per barrel for months before easing. This prolonged shock could trim India’s GDP growth closer to 6 per cent, below the IMF’s earlier forecast of 6.5 per cent.

Higher energy costs are already weighing on consumption and investment, while the rupee faces pressure from rising import bills. She cautioned that if tensions in West Asia continue, oil prices could spike further to $120–140 per barrel, dragging global growth down to near 2 per cent and intensifying risks for India.

In this context, she highlighted the importance of structural reforms. Expanding renewable energy, nuclear power, and domestic supply chains would reduce dependence on imported fossil fuels. Improving the ease of doing business and attracting investment capital could also help offset external shocks.

She noted that India’s growing role in global trade, including potential agreements with the European Union, could strengthen supply chain resilience and create new opportunities amid shifting global patterns.

Gopinath also pointed to monetary policy challenges. While inflation risks have risen, the Reserve Bank of India has so far kept retail fuel inflation contained due to limited pass‑through.

She suggested that the RBI adopt a cautious, data‑dependent stance, balancing inflationary pressures against the need to support growth. A premature tightening could stifle recovery, while delayed action might allow inflation expectations to rise.

Her remarks underline a dual strategy: immediate cushioning through limited fuel price hikes, and longer‑term resilience through targeted support and structural reforms.

India’s ability to navigate the crisis will depend on striking this balance—shielding consumers without undermining fiscal discipline, and building domestic strength to withstand external volatility.

ANI

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IMF Board Clears $1.32 Billion For Pakistan Amid Reform Push

The International Monetary Fund announced on Friday that its executive board had completed reviews of Pakistan’s agreements, thereby unlocking immediate access to $1.32 billion in fresh funding.

This development provides a crucial lifeline to the South Asian nation as it grapples with mounting economic pressures and external uncertainties.

The IMF clarified that Pakistan would be able to draw approximately $1.1 billion under the Extended Fund Facility and a further $220 million under the Resilience and Sustainability Facility. With this latest tranche, total disbursements under the two ongoing programmes rise to about $4.8 billion.

Earlier in the day, Reuters reported that the IMF’s executive board had formally voted to approve the agreement reached with Pakistan in March at the staff level. Pakistan is currently engaged in a $7 billion IMF programme, which has been pivotal in stabilising its fragile economy.

The IMF emphasised that Pakistan must maintain strong macroeconomic policies while accelerating reform efforts, particularly given the highly uncertain external environment since the onset of the war in the Middle East.

The Fund’s statement underscored the importance of resilience in the face of global shocks, urging Islamabad to pursue structural reforms that can strengthen fiscal sustainability and economic stability.

In April, Pakistan’s central bank raised its key policy rate by 100 basis points to 11.5 per cent, marking its first hike in nearly three years. This move was intended to counter inflationary pressures and signal a proactive stance in monetary policy. The IMF acknowledged the State Bank of Pakistan’s efforts, noting that it had acted decisively to maintain an appropriately tight monetary policy stance.

The disbursement comes at a time when Pakistan faces significant challenges, including dwindling foreign exchange reserves, rising inflation, and energy shortages exacerbated by global oil price volatility.

The IMF’s support is expected to provide temporary relief, but the Fund has made clear that long-term stability will depend on Islamabad’s commitment to reforms in taxation, energy pricing, and governance.

Prime Minister Muhammad Shehbaz Sharif welcomed the IMF’s decision, viewing it as a vote of confidence in Pakistan’s economic management. His government has been under pressure to balance fiscal discipline with public discontent over rising living costs.

The IMF’s endorsement provides breathing space, but it also places responsibility on the administration to deliver reforms that can ensure sustainable growth.

This latest tranche highlights the delicate balance Pakistan must strike between external support and domestic reform. While the IMF’s funding offers immediate relief, the country’s economic trajectory will depend on its ability to implement structural changes, strengthen institutions, and insulate itself against external shocks.

The war in the Middle East has already disrupted trade and energy supplies, adding urgency to Pakistan’s reform agenda.

Reuters

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Pakistan Admits Energy Fragility As India’s Massive Oil Reserves Cushions Global Shock

Pakistan has openly acknowledged its acute vulnerability to the global oil shock, conceding that it lacks strategic reserves to shield itself from soaring fuel prices.

The admission came as crude surged to $126 per barrel, the highest level since 2022, amid continued obstruction of shipping through the Strait of Hormuz.

Petroleum Minister Musadik Malik, speaking to Samaa TV, revealed that Islamabad holds only a few days’ worth of crude supplies, underscoring a stark energy security deficit compared with India’s estimated 60–70 days of combined strategic and commercial stocks.

Malik stated that Pakistan has no strategic oil reserves at all, relying solely on commercial stocks. He explained that the country possesses crude sufficient for five to seven days, while refined product held by oil marketing companies could last only 20–21 days.

In contrast, India’s reserves can be released swiftly, providing a crucial buffer against external shocks. He further admitted that Pakistan does not even maintain strategic petrol reserves for a single day, leaving its energy infrastructure exposed. Malik credited India’s resilience to its stronger foreign exchange position and strategic foresight.

He highlighted that India’s $600 billion in reserves and its ability to maintain strategic oil stocks have cushioned the crisis. India also enjoyed fiscal independence, unlike Pakistan, which remains constrained by the International Monetary Fund.

Malik explained that New Delhi reduced taxation as oil prices rose, using its fiscal space to protect consumers. Islamabad, however, was compelled to negotiate discreetly with the IMF for minor relief, as donor-imposed budgetary conditions required heavy levies on fuel to cover deficits.

Malik disclosed that with diesel prices rising three to four times, Pakistan reduced the levy on diesel to zero, shifting the burden to petrol while offering targeted subsidies to motorcyclists.

He said breaking commitments with the IMF would have worsened the situation, so backchannel talks were held to secure an 80‑rupee per litre reduction in the levy.

Despite these measures, the crisis has triggered widespread civil unrest. Prime Minister Shehbaz Sharif recently cut petrol prices by PKR 80 to PKR 378 per litre, but a prior 42.7 per cent hike had already driven costs from PKR 321.17 to PKR 458.41, sparking protests and shortages.

The turmoil in Pakistan coincides with global supply chain paralysis caused by US‑Iran tensions. Since US and Israeli strikes began on 28 February, Iran has restricted access to the Strait of Hormuz, a vital transit point for one‑fifth of global oil and LNG.

While Pakistan reels from the disruption, India has managed to maintain domestic fuel price stability. 

The Indian government has twice revised duties under the Central Excise Act, 1944, in the past month, shielding citizens and oil marketing companies from the global spike that pushed crude from $70 to over $120 per barrel.

ANI

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India Must Fortify Domestic Resilience As Economist Gita Gopinath Warns of Growth Hit Amid Iran Conflict

India’s economic outlook is facing renewed uncertainty as global tensions escalate and oil prices climb higher. Gita Gopinath has issued a stark warning that the impact on India’s growth could be closer to half a percent if current trends persist.

This underscores the extent to which global energy markets directly shape domestic stability. Rising crude prices translate into higher fuel costs, mounting inflationary pressures, and strain on household budgets, creating a ripple effect across the wider economy.

The risks are not confined to energy alone. Remittances from millions of Indians working in the Gulf could also be disrupted if the conflict continues, adding another layer of vulnerability to India’s external accounts.

Gopinath described the present moment as a very uncertain outlook and a tough time to be a policymaker, with governments forced to balance multiple economic risks simultaneously. The challenge lies in navigating external shocks while safeguarding domestic resilience.

Her prescription is firmly rooted in strengthening India’s internal foundations. She emphasised the need for reforms, greater resilience, and a focus on keeping economic fundamentals strong. In her view, domestic stability remains the most effective shield against global volatility.

For India, this means putting its house in order first, ensuring that structural reforms and sound macroeconomic management provide the necessary buffer against external turbulence.

In a world marked by geopolitical conflict and unpredictable energy markets, internal strength is the surest defence.

TOI

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India’s Growth Resilience Backed By IMF As Indus Water Pressures Deepen Pakistan’s Crisis

NDTV’s Gaurie Dwivedi, reporting in the India Ascends series, emphasised how India’s economic resilience is being recognised globally even as it tactically leverages regional treaties to strengthen its strategic position.

The juxtaposition of India’s growth story with Pakistan’s brewing crisis underscores the shifting balance in South Asia’s economic and geopolitical landscape.

India’s economy has been singled out by the IMF as a rare bright spot amid a global slowdown and the ongoing Gulf war, with growth projected at a resilient 6.5%. At the same time, India is leveraging the Indus Water Treaty to exert pressure on Pakistan, where a deepening water and energy crisis is brewing.

The International Monetary Fund has reaffirmed India’s position as the fastest-growing major economy, projecting growth to hold steady at 6.5% through FY27 despite escalating geopolitical tensions and energy market disruptions.

This resilience is attributed to strong macroeconomic fundamentals, policy credibility, and momentum from FY26. IMF Managing Director Kristalina Georgieva highlighted India’s ability to withstand shocks even as global growth moderates due to the ongoing US–Iran conflict.

India’s growth forecast was upgraded from 6.4% to 6.5% in the IMF’s April 2026 World Economic Outlook, making it one of the few large economies to receive an upward revision. The report, titled Global Economy in the Shadow of War, underscores India’s resilience in contrast to a global growth outlook cut to 3.1% for 2026, with inflation and energy prices expected to rise.

While India’s economic trajectory remains strong, the episode also highlights its strategic use of the Indus Water Treaty as leverage against Pakistan. The treaty, signed in 1960, governs water-sharing arrangements between the two countries.

India’s recalibration of its stance has coincided with Pakistan’s mounting challenges in water management and energy supply. Pakistan is facing a worsening water and energy crisis, exacerbated by climate stress, poor infrastructure, and rising demand. This crisis has significant implications for Pakistan’s domestic stability and its ability to sustain economic growth.

NDTV

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India’s Growth Resilient Despite Middle East Conflict, IMF Sees Slight Upgrade For 2026

India’s economic outlook remains resilient despite the turbulence caused by the ongoing Middle East conflict, according to the International Monetary Fund’s Chief Economist Pierre-Olivier Gourinchas.

He emphasised that India has performed strongly in 2025, with growth estimated at 7.6 per cent on a fiscal year basis.

This momentum is expected to continue into 2026, with the IMF projecting growth of 6.5 per cent, a very slight upgrade from earlier estimates.

The revised forecast comes even as global energy prices rise due to the conflict, creating challenges for oil-dependent economies such as India. Gourinchas acknowledged that the war is exerting downward pressure, but stressed that the strong momentum from 2025 more than offsets these headwinds.

He also highlighted easing trade tensions between India and the United States as a supportive factor, noting that tariff discussions have reduced uncertainty and lowered tariff levels.

Inflationary pressures, however, are expected to intensify in India in the coming year. The IMF projects inflation to rise to 4.7 per cent in 2026, driven partly by higher global energy costs and increasing food prices. Gourinchas pointed out that food prices have already begun to pick up in early 2026, adding to the inflationary burden.

While near-term prospects remain stable, Gourinchas cautioned that India’s structural dependence on energy imports poses a vulnerability in a volatile global environment. He underlined that India is highly energy dependent, particularly on oil, which could create headwinds in the future. Nonetheless, he observed that India’s current growth trajectory is broadly aligned with its long-term potential, which the IMF estimates at around 6.5 per cent.

The IMF’s assessment underscores India’s role as a key driver of global growth at a time when many economies are struggling with slowing expansion and heightened uncertainty. The escalation of conflict in the Middle East has disrupted energy flows and contributed to higher oil and commodity prices, with the IMF warning that the duration and intensity of the shock will determine its broader impact on the world economy.

Despite these challenges, India has sustained strong domestic demand and investment momentum in recent years, supported by policy stability and a resilient private sector.

IANS

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'Bechara UAE Needs Money': Pak Senator Mocks $3.5B Debt Repayment Demand By UAE

As Pakistan prepares to settle a $3.5 billion debt owed to the United Arab Emirates, Senator Mushahid Hussain has characterised the financial obligation as a "brotherly rescue" for a nation he describes as currently being "stuck and helpless.", reported NDTV

Speaking in an interview with Dunya News, the Senator argued that Pakistan has a moral responsibility to support the UAE during what he perceives to be a time of crisis for the Gulf nation.

Using the term "Bechara"—an Urdu word meaning helpless or pitiful—the Senator suggested that the UAE is in urgent need of funds due to prior financial commitments made to Donald Trump. He asserted that as "big brothers," it is incumbent upon Pakistan to assist the UAE if they are facing difficulties. He maintained that Pakistan’s decision to return the funds is the correct one, framing the repayment as a gesture of support for a partner in need.

Hussain emphasised the historical role Pakistan has played in the development of the UAE, specifically citing the instrumental involvement of Pakistani expertise in training the UAE’s armed forces. He noted that the two nations have shared a deep bond since the era of Sheikh Zayed bin Sultan Al Nahyan, the founding father and first president of the United Emirates.

The Senator further attributed the UAE's alleged financial strain to regional instability and the drain on reserves caused by a purported $150 billion commitment to President Donald Trump. He suggested that the UAE is currently "stuck" due to its involvement in various Middle Eastern conflicts, specifically naming the wars in Yemen and Sudan, which he believes necessitates Pakistan’s intervention.

In addition to financial commentary, Hussain offered "brotherly advice" regarding the UAE's demographics and its growing relationship with India. He pointed out that out of a total population of 10 million, approximately 4.3 million are Indian nationals. He cautioned the UAE to ensure that these friendly ties do not eventually lead to the country becoming part of "Akhand Bharat," a concept of a Greater India.

According to a senior Pakistani official cited by the newspaper Dawn, Pakistan intends to repay the $3.5 billion by the end of this month. The official stated that the amount would be returned as quickly as possible, stressing that "national dignity" must not be compromised for the sake of financial considerations.

These funds were originally part of external assistance provided in 2019 via the Abu Dhabi Fund for Development to stabilise Pakistan’s balance of payments.

This repayment occurs while Pakistan is participating in an International Monetary Fund programme that necessitates securing around $12.5 billion in rollovers from partners such as China, Saudi Arabia, and the UAE. These funds are essential for maintaining the country's foreign exchange reserves and meeting its external financing obligations.

Currently, Pakistan’s central bank reserves are valued at $16.3 billion. However, the scheduled repayment to the UAE will reduce these reserves by 18 per cent. This significant reduction is expected to weaken the nation’s external buffers and its ability to cover imports.

This fiscal pressure is compounded by the ongoing conflict involving Iran, which has led to rising oil and commodity prices, further impacting the Pakistani economy.

NDTV

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Riyadh Demands Immediate Repayment of $6.3 Billion Loan As Pakistan-Saudi Relations Hit Historic Low

The traditionally robust alliance between Saudi Arabia and Pakistan appears to be fracturing as Riyadh has reportedly demanded the immediate repayment of a $6.3 billion loan, reported NDTV.

This financial recall serves as a stark signal of the deep-seated frustration currently brewing within the Saudi leadership, targeting a relationship that both nations have historically described as ironclad.

This development is particularly significant when viewed through the lens of the long-standing mutual defence understanding between the two countries. Under the terms of this strategic pact, any external attack on one nation is effectively treated as an attack on both, necessitating a united and firm military or diplomatic response.

However, recent geopolitical shifts have tested the limits of this commitment. Despite the explicit nature of their defence agreement, Pakistan failed to provide the unwavering support Riyadh expected during the ongoing crisis with Iran. Instead of standing firmly alongside its Gulf ally, Islamabad opted to position itself as a neutral 'mediator' between the two rival powers.

This shift toward a balanced diplomatic stance has been perceived by Saudi authorities as a departure from Pakistan's prior security obligations. The demand for the multi-billion dollar repayment is widely interpreted as a direct consequence of this perceived diplomatic pivot, indicating that the era of unconditional Saudi financial support may be coming to a close.

The escalating tension highlights a growing divergence in the national interests of the two states. While Pakistan seeks to avoid entanglement in regional sectarian or political conflicts, Saudi Arabia’s insistence on the immediate return of its capital suggests that Riyadh no longer views the 'special relationship' as a sufficient reason to overlook Islamabad's lack of strategic alignment.

Agencies

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ECONOY: IMF Boosts India’s FY26 Growth Outlook To 7.3% Amid Robust Momentum, Flags Future Moderation

The International Monetary Fund has sharply raised its projection for India’s economic growth in fiscal year 2026 to 7.3 per cent, an increase of 0.7 percentage points from its prior estimate.

This upgrade reflects stronger-than-anticipated performance in the latter part of the current fiscal year, particularly in the third and fourth quarters.

It aligns with a recent revision by India’s National Statistics Office, which lifted its estimate for the year ending 31 March to 7.4 per cent, surpassing the government’s initial range of 6.3 to 6.8 per cent.

India continues to stand out as one of the world’s brightest economic performers, often described by IMF officials as a ‘key growth engine’ for the global economy. Julie Kozack, Director of the IMF’s Communications Department, highlighted this role last week, contrasting it with the Fund’s earlier 6.6 per cent forecast from its Article IV staff report. The revision underscores the resilience of India’s domestic demand and investment-driven expansion, even as global headwinds persist.

However, the IMF cautions that this robust pace is unlikely to endure indefinitely. Growth is projected to moderate to 6.4 per cent in the subsequent two fiscal years as cyclical tailwinds dissipate.

For calendar years 2026 and 2027, the forecasts stand at 6.3 per cent and 6.5 per cent respectively, signalling a gradual shift towards more sustainable levels. This trajectory remains the envy of most major economies, positioning India as a counterbalance to slowdowns elsewhere.

On the global stage, the IMF anticipates steady but subdued expansion at 3.3 per cent in 2026 and 3.2 per cent in 2027, matching the estimated 3.3 per cent for 2025. High-tech sectors will provide some offset to weaknesses in manufacturing and construction, though their momentum is expected to ease. 

Risks are predominantly downside, with US tariffs and geopolitical uncertainties posing threats to trade and investment flows, albeit with diminishing impact by 2027.

India-specific factors also contribute to this outlook. Inflation, which plummeted in 2025 due to benign food prices, is forecast to stabilise near the Reserve Bank of India’s target band of 2 to 6 per cent. This provides monetary policymakers with room to support growth without overheating pressures. Low oil prices, driven by weak global demand and ample supply, further bolster India’s external balances as a major energy importer.

The upgrade validates India’s policy framework, including fiscal discipline and structural reforms that have enhanced productivity and private consumption. Yet, sustaining high growth will demand continued investment in infrastructure, digitalisation, and manufacturing under initiatives like ‘Make in India’. Labour market reforms and skill development remain critical to absorbing a burgeoning workforce.

External risks, including volatile commodity prices and protectionist policies, could test this resilience. A stronger US dollar might pressure emerging market currencies, though India’s robust foreign reserves offer a buffer. Geopolitical tensions in key oil-producing regions add another layer of uncertainty, potentially reversing the favourable oil price trajectory.

Looking ahead, India’s trajectory positions it favourably for multilateral engagements and foreign direct investment. The IMF’s endorsement could catalyse inflows into sectors like renewable energy, semiconductors, and defence manufacturing—areas of strategic priority. As global growth engines shift towards Asia, India’s momentum reinforces its centrality in reshaping economic multipolarity.

Reuters

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IMF Projects India's Robust Growth To Stay Resilient At 6.6 Per Cent Despite Tariffs And Global Headwinds

India’s economy is expected to maintain strong growth momentum in the financial year 2025–26 despite heightened global uncertainty and the prolonged imposition of 50 per cent US tariffs, the International Monetary Fund (IMF) said in its latest assessment released in Washington on Wednesday. 

Under this baseline scenario, India’s real GDP is projected to grow at 6.6 per cent in FY2025–26 before easing slightly to 6.2 per cent in FY2026–27, underscoring the economy’s resilience against external shocks.

The IMF noted that India’s economy has continued to perform robustly, following an estimated 6.5 per cent expansion in FY2024–25. Growth accelerated to 7.8 per cent in the first quarter of FY2025–26, driven by strong domestic demand, infrastructure investment, and improved industrial output.

The report highlighted that headline inflation has fallen markedly in recent months, aided by subdued food prices and effective supply-side management.

Financial and corporate sectors remain sturdy, underpinned by healthy capital buffers, improved asset quality, and historically low levels of non-performing assets. Fiscal consolidation efforts have also advanced, reflecting the government’s commitment to sustainable public finances.

Meanwhile, the current account deficit remains contained, supported by buoyant services exports and resilient remittances.

According to the IMF, India’s ongoing reforms—especially those related to the goods and services tax (GST)—are expected to mitigate some of the adverse effects of trade protectionism. The rationalisation of GST rates and simplification of compliance processes could help sustain consumption and investment activity, while enhancing tax buoyancy over the medium term.

Inflation is projected to remain well within target, as the one-off adjustments from GST reform moderate and food supply conditions remain stable. The IMF observed that these domestic stabilisers, supplemented by prudent macroeconomic management, have enabled India to retain its position as one of the fastest-growing major economies globally.

The Fund reiterated that India’s aspiration to transition into an advanced economy will depend on the continued pursuit of comprehensive structural reforms. Priorities include improving labour market flexibility, enhancing productivity in manufacturing, deepening financial markets, and fostering higher female participation in the workforce.

Efforts to boost digital infrastructure, accelerate the formalisation of the economy, and strengthen the start-up ecosystem are expected to support innovation-led growth. The IMF underlined that timely implementation of such measures could lift India’s medium-term growth potential significantly.

Despite the optimistic baseline scenario, the IMF flagged several downside risks to the outlook. A deepening of global trade fragmentation or escalation of geopolitical tensions could tighten financial conditions and dampen foreign direct investment inflows. Persistent or higher tariffs may elevate input costs and weigh on export competitiveness, particularly for labour-intensive sectors.

Weather-related shocks were cited as another vulnerability, given agriculture’s dependence on monsoon patterns. Unfavourable climatic conditions could disrupt crop yields, constrain rural consumption, and potentially reignite inflationary pressures.

In contrast, faster progress on trade agreements, supply chain diversification, and domestic reforms could provide material upside to growth, boosting exports, private investment, and employment creation.

The IMF’s Executive Directors commended India’s robust economic performance and the resilience demonstrated in navigating multiple global disruptions. They welcomed the authorities’ focus on prudent fiscal management, inclusive growth, and financial stability.

The institution supported the government’s plan for continued fiscal consolidation but cautioned that achieving the fiscal deficit target would require strict spending control and efficient resource allocation. 

While welcoming the simplification of GST and adjustments to personal income tax rates, it urged careful monitoring of the fiscal consequences of these changes.

The IMF endorsed the Reserve Bank of India’s (RBI) data-driven approach to monetary policy, noting that prevailing conditions of stable inflation might allow room for cautious monetary easing if tariff levels persist.

It also encouraged efforts to strengthen monetary transmission and foster greater exchange rate flexibility, consistent with the Integrated Policy Framework, to cushion the economy against external shocks.

Overall, the IMF’s assessment highlights that India’s macroeconomic fundamentals remain strong despite the challenging global environment. Resilient domestic demand, sound fiscal and monetary policies, and ongoing structural reforms position the country favourably for sustained growth in the coming years.

Based On ANI Report

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IMF Raises India’s FY26 Growth Forecast To 6.6% Amid Global Slowdown

The International Monetary Fund (IMF) has projected India’s economy to grow at 6.6% in FY 2025-26, reaffirming its position as one of the fastest-growing emerging markets despite a subdued global outlook.

The latest World Economic Outlook (WEO) report attributes this upgrade to India’s resilient first-quarter performance, which managed to offset the impact of increased US tariffs on Indian exports.

According to the IMF, India’s robust GDP growth in the first quarter—measured at 7.8%—has created a strong carryover effect for the full fiscal year. The report predicts that India will surpass China, whose growth is expected to slow to 4.8%, consolidating India’s role as the primary engine of global emerging market expansion.

The upward revision marks a 0.1% rise from the April 2025 forecast, signalling confidence in India’s domestic demand fundamentals and fiscal management. For FY 2026-27, however, the IMF slightly reduced its projection to 6.2%, anticipating a moderation in the momentum generated earlier.

Globally, the IMF foresees slower growth amid a challenging trade environment and persistent geopolitical tensions. The world economy is projected to expand by 3.2% in 2025, before marginally easing to 3.1% in 2026. Advanced economies are expected to maintain slow growth at 1.6%, whereas emerging market and developing economies are estimated to grow at 4.2%, indicating a two-speed recovery.

Inflation levels are forecast to continue easing worldwide, though divergent trends persist among major economies. The report notes that while inflation in the United States may remain above target with upside risks, it will likely stay subdued in most other regions.

Among advanced economies, Spain is projected to lead growth with 2.9%, followed by the United States at 1.9%, down from 2.4% in 2024. Other major economies such as Canada (1.2%), Japan (1.1%), and Brazil (2.4%) are expected to exhibit modest progress. The ASEAN-5 region also continues to demonstrate steady expansion, supporting overall emerging market resilience.

Despite India’s impressive growth track, the IMF cautioned that the global economy faces significant risks. These include prolonged trade uncertainty, rising protectionism, and labour market disruptions. The Fund also warned that fiscal vulnerabilities and potential financial corrections could threaten macroeconomic stability.

To safeguard global recovery, the IMF urged nations to pursue credible and transparent fiscal policies, restore confidence, and reinforce institutional frameworks. It called for the rebuilding of fiscal buffers, preservation of central bank independence, and acceleration of structural reforms to sustain growth amid persistent external shocks.

India’s government has maintained its domestic GDP forecast between 6.3% and 6.8% for FY 2025-26, reflecting continued confidence in the economy’s internal strength and consumption-led growth. The IMF’s upward revision aligns with this assessment and underscores India’s growing resilience amid global trade disruptions and shifting policy landscapes.

Based On ANI Report

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Ashamed Pakistanis Slam Sharif For Flattering Trump, Brand Him ‘Bootlicker, American Puppet’

Prime Minister Shehbaz Sharif’s recent public remarks praising President Donald Trump have triggered widespread outrage in Pakistan. His effusive tone, described by critics as “needless flattery,” has revived uncomfortable memories of Pakistan’s historical dependence on Washington.

Many Pakistanis believe Sharif’s overt praise undermines national dignity at a time when the country seeks to project an image of sovereignty and resilience amid mounting economic and diplomatic challenges.

Social media in Pakistan has erupted with anger and ridicule. The hashtags mocking Sharif as a “bootlicker” and “American puppet” trended on X (formerly Twitter), Facebook, and local news platforms.

Angry citizens accused him of compromising Pakistan’s pride to gain favour with Washington. Even supporters from within his own Pakistan Muslim League (Nawaz) expressed dismay at his tone, calling it politically short sighted and damaging to Pakistan’s international standing.

A national debate has emerged around the question of dignity versus diplomacy. Critics argue that Sharif’s approach projects weakness and desperation for U.S. support. They claim his words reflect a subservient mindset that has long haunted Pakistan’s foreign policy.

Others, however, defend his comments as pragmatic diplomacy aimed at restoring relations with Washington after years of tension. Still, the prevailing sentiment within the populace leans toward humiliation and frustration.

Opposition parties, particularly Imran Khan’s Pakistan Tehreek-e-Insaf (PTI), have seized the opportunity to attack Sharif. They portray him as a leader willing to trade the nation’s self-respect for Western approval. Political commentators note that this incident could further erode public trust in the government, which is already grappling with inflation, austerity measures, and IMF constraints.

Analysts point out that Sharif’s flattering tone may aim to secure indirect U.S. economic and diplomatic relief for Pakistan’s struggling economy.

However, it risks alienating allies such as China and Iran, who view Washington’s influence in the region with suspicion. The timing—coinciding with Trump’s renewed assertiveness on global security and trade—adds to perceptions of Sharif trying too hard to curry favour at an inopportune moment.

The episode has exposed Pakistan’s internal anxiety over its global reputation. The sarcastic public discourse—asking whether “Sharif’s flattery” or “being Pakistani with zero self-respect” is worse—captures a deep sense of national embarrassment. This controversy underscores a wider identity crisis, as many Pakistanis struggle to reconcile their nation’s dependence on foreign aid with aspirations for dignity and independence.

Based On The Print Report

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IMF Raises Concerns Over Pakistan's Missed Tax Goals, Delayed Legal Settlements

The International Monetary Fund (IMF) has raised fresh concerns about Pakistan’s fiscal management after authorities failed to meet the agreed tax collection targets and struggled with prolonged tax-related legal disputes.

According to The Express Tribune, unresolved court cases worth more than PKR 170 billion are still pending with the Supreme Court’s Constitutional Bench, leaving the Federal Board of Revenue (FBR) unable to realize key recoveries that were factored into its collection estimates.

Initial discussions between the IMF mission and Pakistani officials, held on Thursday, largely centered on these shortfalls. These talks are part of the second review of Pakistan’s ongoing IMF programme, under which Islamabad hopes to unlock a critical USD 1 billion tranche.

The review will continue until October 8 and will also include assessments of Pakistan’s USD 1.4 billion climate resilience programme. This round of consultations also marked the exit of Julieth Pico Mejia, the IMF’s outgoing tax expert for Pakistan, who will be succeeded by a representative from Eastern Europe.

FBR performance remains below target. Against its annual goal of PKR 12.9 trillion, the board was only able to collect PKR 11.74 trillion. This shortfall meant Pakistan also missed its agreed tax-to-GDP ratio target of 10.5 percent, although Minister of State for Finance Bilal Kayani pointed out that the ratio still improved by 1.4 percent compared to the previous fiscal year.

Officials attributed the shortfall to several macroeconomic factors. Lower-than-expected inflation, which dropped to 4.5 percent, reduced revenue inflows. At the same time, sluggish economic growth, especially in the large-scale manufacturing sector, weakened the effectiveness of new tax measures. 

These measures gained just over PKR 800 billion, far below the PKR 1.2 trillion projected in the national budget. Inflation itself only contributed PKR 766 billion to overall tax revenues, much lower than anticipated. Additionally, the downturn in the real estate sector further reduced tax collections, impacting one of the country’s historical revenue bases.

The IMF also sought clarity on pending litigation. Pakistan had earlier given assurances that the Supreme Court would deliver verdicts on high-profile super tax cases—particularly those involving oil firms and 10 heavily taxed sectors—by June. These rulings were expected to unlock PKR 177 billion in revenues. Yet, the court has not issued final decisions, despite commencing daily hearings. Only partial progress has been made so far: arguments have been completed in one case, and the government has concluded its presentation in another.

Due to this delay and the ongoing economic slowdown, the FBR is now unlikely to meet quarterly targets. With five days left in September, the board would need to collect PKR 140 billion daily to close the gap, a target officials themselves admit is nearly unattainable. So far, only PKR 2.4 trillion has been collected this quarter, leaving a wide shortfall just days before the deadline.

Despite these challenges, some positive signs were noted. Tax compliance levels are on the rise, with the number of income tax filers increasing from 7 million last year to 7.7 million for the 2024 tax year. 

Importantly, the government also reported a significant fiscal achievement: a primary surplus of PKR 2.4 trillion, surpassing IMF expectations and marking the largest such surplus in 24 years. This surplus was highlighted to demonstrate Islamabad’s broader fiscal discipline, even as structural weaknesses in tax collection remain unresolved.

While Pakistan’s government is trying to project fiscal stability through an improved primary balance and expanded tax base, the IMF remains concerned about structural inefficiencies. In particular, weak revenue mobilization, reliance on delayed legal recoveries, and vulnerability to economic slowdowns continue to undermine Pakistan’s fiscal targets, raising doubts about the sustainability of its IMF programme commitments.

Based On ANI Report

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