Pakistan’s financial crisis has reached such a level that even surviving day-to-day needs foreign help. Now, as tensions rise with India after recent terrorist attacks, Pakistan faces a much bigger threat — economic collapse. Experts believe Pakistan’s fragile economy won’t survive if a full-scale war breaks out. India, in response to Pakistan’s recent aggression, has launched Operation Sindoor and raised objections at the IMF about giving Pakistan more funds. This could tighten the noose around Islamabad’s economy even further.
Let’s understand the five most significant problems in Pakistan’s economy that make it too weak to afford war.
1. Pakistan Is Dependent on the IMF for Survival
In September 2024, Pakistan secured a $7 billion bailout from the International Monetary Fund (IMF). That package gave temporary relief but didn’t fix the country’s long-term financial problems. The IMF’s latest forecast says Pakistan’s GDP will grow only 3.1% in 2025-26. This is far below what’s needed for stable development.
In fact, in 2022-23, Pakistan’s GDP had already gone into negative growth at -0.2%. Now, with rising military tension, the economic burden could increase sharply. Meanwhile, India has asked the IMF to review the funding, accusing Pakistan of using aid money to support terrorist activities. If the IMF agrees, Pakistan might lose its most significant financial lifeline.
2. Foreign Reserves Running on Empty
Pakistan owes more than $130 billion in external debt. About 20% of this is from China. But what’s worrying is that Pakistan only has around $15 billion in foreign exchange reserves — enough to pay for just three months of imports.
Next year alone, Islamabad needs to repay over $22 billion in foreign loans. With such a low reserve and high debt burden, Pakistan cannot afford to increase military spending. If war breaks out, the country may default on its international payments.
3. Poverty and Unemployment Are Breaking the Nation
The World Bank’s March 2025 report revealed that over 42.3% of Pakistan’s population is below the poverty line. In just one year, 26 lakh more people became poor. Economic problems, floods, COVID-19, and inflation have made survival difficult for ordinary people.
In such a situation, war will make things worse. Internal unrest will rise, and the government may lose control in many parts of the country. A war with India will increase poverty, create a refugee crisis, and deepen Pakistan’s already unstable situation.
4. The Energy System Is Dependent on Imports
Pakistan does not produce enough oil or gas on its own. It relies heavily on Gulf countries to meet its energy needs. The local energy sector is also in bad shape due to poor planning, theft, and heavy subsidies. The power sector is buried under circular debt that keeps growing.
The IMF has already raised concerns about Pakistan’s energy crisis. If there is a war, fuel costs will rise, power shortages will increase, and industries will shut down. The result will be more job losses and higher inflation, which Pakistan cannot manage right now.
5. No Political Stability or Economic Control
Pakistan has faced continuous political instability over the last few years. Weak governance, tax evasion, and a lack of proper economic planning have worsened the situation. The tax base is tiny, which means the government earns very little from taxes.
Pakistan depends on foreign aid and loans to pay salaries, subsidies, and defence costs. If war begins, and if the IMF or other countries stop helping, Pakistan will have no money to fund its military or public services.
Why India Opposed IMF Loan to Pakistan
India has taken a strong diplomatic step by asking the IMF to stop lending money to Pakistan. India claims that the aid money is being misused to fund terrorist activities and cross-border attacks. After Pakistani terrorists attacked Pahalgam in Jammu and Kashmir, India launched “Operation Sindoor” in response.
Pakistan then responded with drone and missile attacks in parts of Jammu, Punjab, and Rajasthan on May 8. However, India’s modern defence systems, like the S-400, successfully stopped most attacks.
India’s opposition to the IMF is now a warning to Pakistan that military aggression could come with financial punishment. If the IMF agrees with India, Pakistan might lose access to more loan money, pushing it closer to default.
Pakistan vs India: A Big Economic Gap
India is currently the fastest-growing major economy in the world. It has a substantial reserve, good tax collection, and global investments. In contrast, Pakistan is buried in debt, has a weak industrial base, and survives on borrowed money.
If a war happens, India has the economic power to support its army and rebuild its infrastructure. But Pakistan, with its current economy, will fall apart within weeks. The country is already facing a survival crisis — a war could finish what little stability is left.
What Can Pakistan Do?
Instead of increasing conflict with India, Pakistan’s government and military need to focus on saving their economy. Starting or joining a war will break the financial system and bring more problems for its citizens. Rising food prices, lack of jobs, and protests have already made life difficult for Pakistanis.
It’s time for Pakistan to understand that spreading terrorism or supporting attacks across the border will only invite international pressure and more isolation. It must choose peace and economic reform over war and destruction.
Sources: Financial Express, World Bank, IMF Reports, TV9 Hindi
Disclaimer: This article is based on current media reports and international economic data. Readers should follow official government or financial institution updates for verified information.
