Pakistan, the IMF, and a Shift in Power

Shazia Mehboob

Islamabad: By any measure, May 2025 marked a turning point for Pakistan, not only in military terms, but also in how the country is perceived globally.

For years, Pakistan has carried a dual burden: a fragile economy dependent on IMF bailouts and an international narrative that often portrayed it as unstable or unreliable. The brief but intense conflict with India in May altered that equation in ways that extend far beyond the battlefield.

When the Pakistan Air Force demonstrated what officials described as “full-spectrum capability,” the impact resonated well beyond South Asia. This was not merely a tactical military episode; it was a moment of validation.

Pakistan’s defence platforms, particularly the JF-17 Thunder, were suddenly discussed alongside European-made systems such as France’s Rafale. That comparison itself was significant, signaling a subtle but meaningful shift in global defence discourse from a Europe-centric lens to a more Asia-focused technological reality.

Markets noticed. Analysts tracked fluctuations in defence-sector stocks linked to both aircraft programmes, underscoring how modern warfare increasingly shapes global economic perceptions.

Combat performance has become, for better or worse, a form of product testing and in the eyes of many observers, Pakistan’s systems passed that test.

Geopolitics amplified this shift. US President Donald Trump’s public frustration with India over its continued oil purchases from Russia added another layer to the moment.

His repeated claims about Indian aircraft losses, whatever their precise accuracy, were notable not because they originated in Islamabad, but because they came from the head of a state that still wields outsized global influence.

The effect was twofold: India’s military credibility faced renewed scrutiny, while Pakistan’s long-damaged image began to recover.

For Pakistan, this recovery matters enormously. For years, Indian diplomacy successfully framed Pakistan as a security risk rather than a security provider, as a problem rather than a partner. The post-May discourse subtly but decisively challenged that narrative.

Pakistan was no longer discussed primarily in the language of terrorism or fragility, but increasingly in terms of capability, discipline, and deterrence.

It is in this context that Defence Minister Khawaja Asif’s recent statement should be understood. His claim that Pakistan may not require IMF assistance within six months due to rising defence procurement orders would once have sounded implausible.

Today, it sounds at least debatable. Asif argued that Pakistan’s military equipment had been “tested in real combat,” generating international confidence and interest.

If defence exports increase meaningfully, they could provide not only foreign exchange but also strategic breathing space, something Pakistan’s economy desperately needs.

This does not suggest that defence exports alone can substitute for structural reform. Pakistan’s economic challenges remain deep-rooted: a narrow tax base, energy inefficiencies, and governance gaps cannot be solved through arms sales.

Yet credibility matters in economics as much as it does in diplomacy. Countries invest in states they trust, partner with nations they respect, and trade with systems they believe in.

The May conflict also revealed another defining reality of modern warfare: battles are fought not only with weapons, but with narratives.

While Indian media struggled to reconcile early claims with unfolding events, Pakistani journalists, analysts, and citizens became active participants in shaping the global conversation.

This information resilience reinforced the perception of a state that was not only operationally capable, but also communicatively coherent.

Operation Bunyan-um-Marsoos, as Pakistan’s response was named, symbolized the fusion of kinetic, cyber, and informational domains. Beyond its military objectives, it conveyed organizational maturity.

The reported use of indigenous platforms, cyber capabilities, and coordinated command structures suggested a defence ecosystem that is evolving, not merely purchasing hardware, but developing competence.

This evolution matters for long-term economic sustainability. A credible defence industry can spur high-skilled employment, technology transfer, and export diversification. More importantly, it can strengthen Pakistan’s negotiating position globally, including with institutions such as the IMF.

Financial dependence often reflects political weakness; reducing it requires more than austerity, it requires leverage.

There is also a broader opportunity embedded in this moment. A Pakistan that is confident in its security is better positioned to pursue peace. Stable deterrence reduces the temptation of misadventure, while inclusive economic stability lowers internal pressures.

Together, they can help shift the country from perpetual crisis management toward strategic planning.

Still, caution is essential. Military success must not breed complacency, nor should defence achievements overshadow the urgency of civilian-led economic reform. Victories fade if they are not institutionalized through education, culture, and policy. Preserving national memory is important, but translating momentum into governance is vital.

Pakistan now stands at a crossroads. The events of May 2025 reopened doors that had long been closed: doors to credibility, confidence, and choice. Whether this moment becomes a foundation for economic independence or another missed opportunity depends on what follows.

Moving beyond the IMF is not merely a financial objective; it is a statement of sovereignty. If Pakistan can pair its restored credibility with disciplined reform, regional stability, and responsible diplomacy, the path toward a peaceful, self-sustaining, and harmonized Pakistan may finally come into view.

Shazia Mehboob is a PhD scholar and a visiting faculty member. She is also an investigative journalist and the founder of The PenPK.com. She tweets @thepenpk.

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