Pakistan to brief IMF on defence budget amid India tensions

The federal government has decided to take the International Monetary Fund (IMF) into confidence over the recent escalation in tensions with India, particularly if the situation leads to a significant increase in defense spending and related fiscal requirements.

The development comes ahead of formal negotiations with the Fund, which are expected to begin from May 14, as Islamabad prepares to present its budget for the fiscal year 2025-26.

According to sources in the finance ministry, consultations with the IMF will revolve around the government’s budgetary framework, including proposed revenue targets and expenditure estimates.

“If the situation with India escalates further and translates into higher defence spending, the government will share these considerations with the IMF during the talks,” said a senior official familiar with the matter.

Recent skirmishes along the Line of Control (LoC) have prompted concerns within economic circles over a possible rise in military expenditure at a time when the government is already grappling with limited fiscal space and stringent IMF conditions. Officials say that any major shifts in budgetary allocations — particularly those related to defence — must be conveyed transparently to the Fund to avoid friction in the negotiation process.