Pakistan carried out its second missile test in three days on Monday, amid rising tensions with India over violence in Kashmir. The move comes as Moody’s warned that the ongoing standoff could undermine Pakistan’s economic reforms and slow its recovery from a recent financial crisis.
Relations between the nuclear-armed neighbors have deteriorated sharply following an April 22 attack in Indian Kashmir that killed 26 people, marking the deadliest assault on civilians in India in nearly two decades. India has accused Pakistan of being involved in the attack, a claim Islamabad has vehemently denied, while also alleging that New Delhi is preparing military action against Pakistan.
The conflict has raised alarms globally, with world powers closely monitoring the situation. The violence, including small arms exchanges across the border, has heightened regional tensions.
Moody’s warned that the diplomatic flare-up could have serious repercussions for Pakistan’s $350 billion economy, which had been on the mend after securing a $7 billion bailout from the International Monetary Fund (IMF) last year and avoiding a default.
“Continued escalation with India could undermine Pakistan’s economic growth and hinder its fiscal consolidation efforts, slowing progress toward macroeconomic stability,” said Moody’s. “Prolonged tensions could also restrict Pakistan’s access to international financing and put pressure on its foreign-exchange reserves.”
This warning follows reports that India has requested the IMF to review its loans to Pakistan, a move that could further complicate Islamabad’s economic outlook.
While India’s economy is unlikely to face major disruptions due to its minimal economic ties with Pakistan, increased defense spending as a result of the tensions could strain India’s fiscal position, according to Moody’s.
Missile Test
Kashmir remains at the center of the ongoing conflict between India and Pakistan, both of which claim the region in full but each controls only parts of it. India has accused Pakistan of supporting Islamist militants fighting Indian forces in its territory, while Pakistan asserts that it only offers diplomatic and moral support for Kashmiris advocating for self-determination.
On Monday, Pakistan’s military confirmed it had successfully tested a Fatah series surface-to-surface missile with a range of 120 km (75 miles), just two days after launching the Abdali surface-to-surface missile with a range of 450 km.
Prime Minister Shehbaz Sharif hailed the test as a demonstration of Pakistan’s strong defense capabilities, declaring that “Pakistan’s defense is in strong hands.”
Meanwhile, in Pakistan-administered Kashmir, Information Minister Attaullah Tarar told reporters that there were no communication channels open with India at this time.
International Reactions
As the missile test unfolded, Iran’s Foreign Minister, who had earlier offered to help foster dialogue between India and Pakistan, was in Pakistan for talks with government leaders. He is scheduled to visit India on Thursday.
Russia expressed deep concern over the escalating situation, reaffirming its commitment to its relations with both countries. Russian President Vladimir Putin condemned the attack in Kashmir during a phone call with Indian Prime Minister Narendra Modi, offering full support to India in its “fight against terrorism,” according to India’s Foreign Ministry spokesperson Randhir Jaiswal.
Pakistan, meanwhile, announced that it would formally bring the situation to the United Nations Security Council, urging the body to take necessary steps to maintain international peace and security.