By Admin 
Moody’s Rating has issued a big alert amid growing tension between India and Pakistan. According to the report, if this tension continues for a long time, Pakistan will suffer the most. Its economy may suffer a deep shock, which can also derail the government’s financial improvement process. This can pose a big threat to Pakistan’s economic stability.
Crisis hovering over foreign debt and forex reserve
Moody’s has warned that the current stress can affect Pakistan’s ability to achieve external funding. Also, the forex reserves it has may be insufficient to repay external debt in the coming years. In such a situation, Pakistan can also find it difficult to get help from institutions like IMF.
Improvement visible in Pakistan, but the danger is not yet averted
However, Moody’s also says that there have been some improvements in Pakistan in recent times. There is definitely some relief from following the decline in inflation, gradually increasing GDP, and IMF conditions. But these improvements are not sustainable until regional peace remains and tension does not increase further.
India’s economic condition strong and stable
Talking about India, Moody’s report says that India’s economy is moving firmly. India’s GDP growth remains stable, government investment is increasing and strong consumption is being seen in the domestic market. The biggest thing is that India’s trade with Pakistan is negligible (less than 0.5%), so the economic impact will be limited.
Defense spending may increase, but limited impact on India
Moody’s has definitely warned that if tension on the border increases, India may have to increase military expenses. This may have a little impact on India’s fiscal stability, but overall India’s economic condition will remain strong.
India’s tough answers
After the Pahgam attack, the Government of India has taken a tough stand on the economic and diplomatic level. All kinds of imports have been banned from Pakistan, whether it is coming through a third country. The postal service and parcel service have been suspended and Pakistani ships have been stopped from entering Indian ports. Along with this, Indian ships are also not being allowed to visit Pakistani ports.
End of Indus Water Treaty and Shimla Agreement
India has suspended the Indus Water Treaty of 1960, which can have a major impact on Pakistan’s water rights. In response, Pakistan has also suspended the 1972 Shimla agreement and has stopped bilateral trade from India. Apart from this, Indian airlines have also been banned from passing through their aircraft.
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