IMF

The Pakistan Stock Exchange (PSX) staged an extraordinary comeback last week, buoyed by a landmark ceasefire agreement between India and Pakistan and reinforced by substantial support from the International Monetary Fund (IMF). The KSE-100 index soared by nearly 12 percent, recovering from recent geopolitical turbulence that had rattled investor confidence. This remarkable rally was not only underpinned by diplomatic de-escalation but also driven by improving macroeconomic indicators, including strong remittance inflows and a rise in foreign direct investment.

India’s opposition to the International Monetary Fund’s (IMF) recent approval of a USD 1 billion loan tranche to Pakistan has sparked political controversy, highlighting tensions within Indian political discourse. Defence Minister Rajnath Singh publicly condemned the loan, equating financial assistance to Pakistan with indirect funding of terrorism. However, the Congress party has criticized the ruling government for allegedly failing to actively oppose the loan during the IMF’s Executive Board meeting, accusing it of yielding to U.S. pressure.

India’s foreign exchange reserves witnessed a sharp rise of USD 4.553 billion, reaching USD 690.617 billion for the week ended May 9, 2025, according to data released by the Reserve Bank of India (RBI). The growth was largely driven by a significant jump in the country’s gold reserves, which increased by USD 4.518 billion. This recovery follows a dip in the previous week and reinforces India’s robust external position, even as minor declines were observed in other components such as Special Drawing Rights (SDRs) and the IMF reserve position.

The International Monetary Fund (IMF) has commenced virtual consultations with Pakistan to discuss the upcoming federal budget for FY2025–26, following the postponement of its mission’s physical visit due to escalating regional security risks. Despite logistical challenges, the IMF is pressing forward with a reform-driven agenda, pushing Islamabad toward stringent fiscal consolidation measures. Key points of contention include Pakistan's ability to achieve a Rs. 2 trillion primary surplus and increase tax revenues to 11% of GDP.

As Pakistan grapples with economic instability and mounting tensions with neighboring India, the International Monetary Fund (IMF) has approved a crucial $1 billion disbursement, offering temporary fiscal relief to a beleaguered economy. The payment, part of a broader $7 billion bailout agreement, comes alongside approval for a separate $1.4 billion under the IMF’s Resilience and Sustainability Facility, though those funds remain unreleased. India has raised objections, citing potential misuse of funds.

India’s economic outlook has been revised downward by major global financial institutions, signaling growing concern over the country’s near-term fiscal trajectory. The World Bank now estimates India’s GDP growth for FY25/26 at 6.3%, down from its earlier projection of 6.7%, citing weaker-than-expected private and public investment as key factors. Similarly, the International Monetary Fund (IMF) has trimmed its growth forecast to 6.2%.

The International Monetary Fund (IMF) has urged Pakistan to exclude Rs 1.1 trillion worth of provincially-mandated development projects from the federal development budget. This move is part of a broader effort to enhance fiscal discipline and ensure that provincial governments take full responsibility for their development initiatives, in line with the 18th amendment of Pakistan's constitution. The IMF's push aims to streamline federal expenditures and bolster provincial autonomy, as Pakistan continues to negotiate crucial economic reforms under its ongoing IMF loan program.

The International Monetary Fund (IMF) has revised its growth forecast for India, projecting a rate of 6.2% for 2025-26, down from the previously estimated 6.5%. This downward revision is attributed to escalating trade tensions and global uncertainties. Despite the slower-than-expected global recovery, India's economic outlook remains relatively stable, bolstered by private consumption, particularly in rural areas. However, the global growth forecast has also been lowered, with significant slowdowns expected in advanced economies and emerging markets, including China.

In March 2025, Pakistan received a record USD 4.1 billion in remittances, marking the highest monthly inflow in the country's history. This significant surge, a 37% increase year-on-year, offers crucial support to Pakistan’s foreign exchange reserves and broader economic stability. The State Bank of Pakistan (SBP) confirmed that the growth in remittances is a vital factor in easing the nation’s liquidity pressures. However, despite the positive inflows, Pakistan’s GDP growth for FY25 is expected to remain subdued at around 3%, primarily due to a decrease in agricultural output.

Sri Lanka’s fragile post-crisis recovery is facing renewed pressure from external shocks, as aggressive trade tariffs imposed by the Trump administration threaten to derail momentum. The International Monetary Fund (IMF), concluding its recent staff visit, acknowledged the country’s impressive 5% rebound in growth for 2024 and noted substantial fiscal reforms and falling inflation. However, the 44% tariff on Sri Lankan exports to the United States, particularly apparel, casts a shadow over the sustainability of this progress.