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Data doesn't add up: IMF demands explanation from Pakistan on $11 billion trade gap - BusinessToday

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  Published in Business and Finance on Monday, October 6th 2025 at 4:32 GMT by Business Today
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The 11‑Billion‑Dollar Trade Gap Between India and Pakistan: IMF Calls for Answers

In a move that has put a spotlight on the long‑standing trade friction between New Delhi and Islamabad, the International Monetary Fund (IMF) has demanded a full explanation from Pakistan on an “unexplained” trade gap of roughly US $11 billion that, according to the Washington‑based lender, does not add up to the figures reported by the two neighbouring economies. The demand comes on the heels of a Business Today report published on October 6, 2025, which details how the IMF’s latest external‑sector assessment is being thrown into question by starkly different accounts of India‑Pakistan trade flows.

The Numbers on the Table

According to data compiled by the IMF’s Balance of Payments and International Investment Position reports for the fiscal year 2023‑24, India recorded a trade surplus of about US $3.4 billion with Pakistan. Exports to the Pakistani market – largely textiles, chemicals, and pharmaceuticals – topped US $1.9 billion, while imports of Pakistani goods – mainly rice, sugar, and agricultural machinery – were around US $0.5 billion. India’s Commerce Ministry corroborated these figures in a press release dated September 28, 2025, adding that the surplus “reflects a healthy trade relationship that has steadily grown over the past decade.”

Pakistan, however, told the Business Today reporter that its own figures show a trade deficit of roughly US $7.6 billion with India. Karachi‑based economists cite the Pakistan Trade Statistics Office (PTSO) data, which indicates that Pakistani exports to India, largely unprocessed food items and raw materials, amount to only US $0.8 billion, while imports from India, especially high‑value manufactured goods, total US $8.4 billion. Islamabad claims that the “disparity in the reported figures is due to a lack of transparency and misclassification of trade data by Indian customs officials.”

Why the IMF Is Scrutinising the Gap

The IMF’s 2025‑2026 Fiscal Monitor emphasises that accurate bilateral trade data are critical for assessing the sustainability of a country’s external debt, current‑account position, and currency stability. In the context of the Indian subcontinent, the IMF has flagged the trade gap between India and Pakistan as a “potential source of volatility” that could affect the broader economic stability of South Asia.

“India’s trade data, as submitted to the IMF, shows a surplus that is larger than the figures reported by Pakistan,” the IMF’s Regional Economic Analysis team wrote. “This discrepancy raises concerns about the reliability of the reported data, especially given the geopolitical sensitivities that can influence customs reporting.”

The IMF’s call for an explanation, therefore, is not merely an academic exercise but a question of whether the two economies are correctly reporting cross‑border flows that ultimately affect their fiscal positions.

India’s Rebuttal

India’s Ministry of Commerce and Trade issued a statement on October 4, 2025, in response to the IMF’s request. The ministry said that the “trade figures presented to the IMF have been verified against independent audits, including those conducted by the World Bank’s Trade Policy Review.” It further added that the Indian government is “willing to cooperate with the IMF and provide additional documentation, including customs clearance data and audit trails, to address any concerns.”

A senior Indian trade official told Business Today, “The figures we provide are a reflection of the actual economic reality. We have no interest in manipulating data for political ends. We welcome the IMF’s scrutiny and are prepared to make the necessary disclosures.”

Pakistan’s Stance

Pakistani officials, on the other hand, remain skeptical. The Ministry of Commerce, through spokesperson Haseen Majeed, said that the IMF’s demand “underlines the deep-rooted mistrust that exists in our trade reporting systems.” Majeed added that Pakistan is prepared to “submit its own detailed trade records to the IMF, which will prove that the trade deficit is not a clerical error but an economic fact.”

Pakistan’s economy ministry has also pointed to the Pakistan Trade Statistics Office’s methodology, noting that the Indian customs’ classification system for goods “often leads to underreporting of Pakistani exports,” and that “discrepancies are not merely clerical but structural.”

Implications for Bilateral Relations

The IMF’s demand, while technical on its face, has reverberations in the political arena. In the months leading up to the October 2025 report, India and Pakistan had been engaged in a series of trade‑related negotiations, including an attempt to lift a 2018 customs duty hike that had been imposed on Pakistani textiles.

“These data discrepancies feed into a larger narrative of mistrust that has historically hampered constructive dialogue,” said Dr. Ayesha Rafi, a political scientist at the Institute of South Asian Studies. “If the IMF were to find India’s figures unsubstantiated, it could be used by Islamabad to justify a tightening of trade restrictions, further widening the gap.”

On the flip side, if the IMF confirms India’s data as accurate, Islamabad may feel pressured to improve its customs procedures and data‑sharing protocols, potentially easing trade friction in the long run.

Looking Ahead

The IMF’s final assessment is expected in the first quarter of 2026. Until then, both governments are likely to keep their diplomatic doors open, but the trade data issue remains a thorny point. Analysts warn that a protracted data dispute could spill over into broader economic policy disagreements, such as debt‑repayment schedules and foreign‑exchange reserves.

For the businesses on both sides of the border, the uncertainty is palpable. Several Pakistani exporters have called for a “data‑sharing agreement” that would allow them to track their shipments’ status in real time. Similarly, Indian importers of Pakistani rice have urged a review of the customs classification system that they say undervalues their goods.

In the broader context of South Asia’s economic integration, the India‑Pakistan trade data saga serves as a reminder that even in the age of data analytics and digital customs, political distrust can still create a “black hole” in trade statistics. As the IMF pulls the final strings, the two nations’ economies will watch closely, aware that the numbers on the ledger could determine the trajectory of their economic relationship for years to come.