Growing tensions between Pakistan and India have raised serious concerns about regional credit risks and the potential economic fallout, according to international financial agencies.
S&P Global Ratings issued a warning on Thursday, highlighting that the recent escalation between the two nuclear-armed neighbors has amplified regional credit risks.Â
The credit agency anticipates that while military actions will likely remain temporary, miscalculations in the ongoing conflict could significantly affect the credit ratings of both nations.Â
S&P noted that heightened tensions are expected to persist for weeks, with the possibility of further military actions, though it does not foresee an immediate impact on the creditworthiness of either country.Â
The agency warned that any prolonged conflict would derail Pakistan’s path to economic stability and could undermine foreign investment in India, especially amidst global economic uncertainties.
Simultaneously, the International Monetary Fund (IMF) also expressed concern over the rising tensions. In a statement, the IMF emphasized the importance of a peaceful resolution to the conflict, with a spokesperson stating, “We hope issues between Pakistan and India are resolved peacefully and that tensions subside.”Â
The IMF confirmed that its Executive Board will meet on May 9 to review Pakistan’s economic progress and funding request, adding that it remains committed to supporting Pakistan’s economic reform program.Â
The IMF reiterated its support for Pakistan’s efforts to stabilize its economy, as the escalating situation between Pakistan and India continues to threaten regional and global economic stability.
The military confrontation, particularly the missile strikes by India on May 6, which resulted in the deaths of at least 31 civilians and injuries to over 50, has only heightened global concerns. As the conflict lingers, both the IMF and S&P Global are urging for diplomatic efforts to de-escalate the situation and avert further economic damage.
