The latest report by Global Credit Rating Agency Moody’s is a major warning for Pakistan. It has expressed concern about the increasing tension between India and Pakistan. According to the report, Pakistan may have trouble getting external financial help due to increasing stress. This is expected to increase pressure on Pakistan’s foreign exchange reserves. This store is already so low that it can be difficult to pay external loans for the next few years. Moody’s says that Pakistan’s economic speed will slow down due to increasing tension with India. At the same time, efforts to improve the financial situation of the government may shock.
China’s huge debt on Pakistan
China has a lot of interest with Pakistan. The most mentioned in this is the China-Pakistan Economic Corridor (CPEC). This is the reason why he refuses to favor Pakistani. However, it is possible that in front of economic challenges, China also give priority to its interests and does not be able to give as much concessions to Pakistan as it would be expecting. China has a variety of challenges with its own economy. These have increased after the trade war with the US.
Already, China’s debt on Pakistan is quite high. China has now become Pakistan’s largest bilateral lender. According to available data till December 2024, China accounts for about 22 per cent of Pakistan’s total external debt. This amount is about 28.8 billion dollars. According to some other sources, it is also said to be about $ 29 billion. In recent months, Pakistan has also requested China to rearrange some of its debt to reduce financial pressure.
According to reports in late April 2025, Pakistan has also sought a new loan of $ 1.4 billion from China. In such a situation, China has a very important debt on Pakistan. Pakistan is largely dependent on China for its financial stability. China’s record in collecting debt has been very poor. Whoever depended on him in the case of debt, his bankruptcy came out. Countries like Sri Lanka, Maldives and Pakistan have become examples of this.
Tension does not make a difference on India
In contrast, tension with Pakistan will not have much effect on India. The rating agency Moody’s has pointed to this. He has said that India’s economy will be strong. This is because of strong government investment and people’s expenses. India has very little trade with Pakistan. In 2024, less than 0.5% of India’s total exports go to Pakistan. Therefore, increasing stress will not affect India’s economy. However, increasing defense spending may cause little pressure on India’s financial condition.
On April 30, Pakistan’s Information Minister said that India is planning to attack Pakistan. This can happen in response to the terrorist attack on tourists in Jammu and Kashmir on 22 April. India and Pakistan have worsened since this attack. India has suspended the 1960 Indus Water Treaty. This may cause a huge decrease in water supply to Pakistan. In response, Pakistan has suspended the 1972 Shimla Agreement. The two countries have completely stopped trade with each other. It has also closed its aerspace.
Moody’s report states that there has always been tension between Pakistan and India. Military action has also been taken many times. The report also states that there will be tension between the two countries from time to time. However, there will be no major war from it. Moody’s says that he has taken these things in mind in his political risk assessment report.
Moody’s report has kept Pakistan’s rating CAA2 positive and India’s rating BAA3 stable. The rating agency says that this tension has arisen at a time when Pakistan’s economy was gradually improving. The growth rate was increasing. Inflation was decreasing. Foreign exchange reserves were growing. The IMF (International Monetary Fund) program was also progressing. However, these reforms may shock due to increasing tension with India.