Pakistan expects Indus Water Treaty reinstatement, sees US trade talks progressing

ISLAMABAD: Finance Minister Muhammad Aurangzeb has said Pakistan expects the Indus Water Treaty — unilaterally suspended by India amid recent hostilities — to be reinstated, expressing confidence that the long-standing agreement would return to its original status.

In an interview with Reuters on Monday, Aurangzeb stated that Pakistan is not anticipating any immediate impact from India’s suspension of the treaty and “does not even want to consider any scenario which does not take into account the reinstatement of this treaty.”

The remarks come days after a ceasefire was brokered between the two nuclear-armed neighbours, following four days of intense fighting triggered by a deadly April 22 attack in Indian Kashmir that killed 26 Hindu tourists. The ceasefire was announced on Saturday by US President Donald Trump, who claimed trade was a major reason the hostilities had ended and offered continued support for peace efforts.

Aurangzeb said Pakistan was now focused on pushing forward with trade discussions with the United States, which had played a key role in mediating the ceasefire. He said progress could be made in “short order”, with Islamabad looking to increase imports of high-quality cotton and soybeans from the US, while also exploring other asset classes such as hydrocarbons.

The finance minister also welcomed recent developments on the economic front, noting that Pakistan would receive a $1 billion loan disbursement from the International Monetary Fund (IMF) on Tuesday, part of a broader $7 billion bailout package. In addition, the IMF executive board has approved a fresh $1.4 billion loan under its climate resilience facility.

He said the federal budget for the next fiscal year, starting in July, would be finalised within three to four weeks, with budget talks with the IMF scheduled from May 14 to 23.

On the trade front, Aurangzeb acknowledged that Pakistan currently faces a 29 per cent tariff on exports to the US due to a roughly $3 billion trade surplus. However, he noted that the tariff is under a 90-day pause announced in April and that ongoing discussions could pave the way for a more favourable arrangement.

When asked about potential increases in defence spending following the recent escalation, Aurangzeb declined to give details, saying it was premature to comment before budget finalisation. However, he added, “Whatever we need to do in terms of ensuring that our defence requirements are met will be met.”

He also downplayed the economic impact of the recent conflict with India, describing it as a “short duration escalation” and saying it could be “accommodated within the fiscal space which is available to the government of Pakistan.”

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