IMF Justifies $1 Billion Loan to Pakistan Amid India’s Protest
The International Monetary Fund (IMF) has defended its decision to release a $1 billion loan to Pakistan, despite strong objections from India. The IMF stated that Pakistan has met all the necessary conditions for the latest installment, which is part of a larger financial support package.
This latest financial assistance comes as part of the Extended Fund Facility (EFF) program, which was approved in September 2024. Under this program, Pakistan has already received approximately $2.1 billion in aid.
IMF Justifies Loan to Pakistan
At a press briefing, the IMF’s director of communications, Julie Kozack, confirmed that Pakistan had fulfilled all its targets. She noted that the country had made progress on several reforms, which led to the approval of the program.
“Our Board found that Pakistan had indeed met all of the targets. It had made progress on some of the reforms, and for that reason, the Board went ahead and approved the program,” Kozack said.
“The first review was planned for the first quarter of 2025. And consistent with that timeline, on March 25 of 2025, the IMF staff and the Pakistani authorities reached a staff-level agreement on the first review for the EFF. That agreement, that staff-level agreement, was then presented to our Executive Board, which completed the review on May 9. As a result, Pakistan received the disbursement at that time,” she added.
Amid tensions with India, the IMF has imposed 11 new conditions for Pakistan to receive the loan. These conditions include parliamentary approval, increasing the debt servicing surcharge in electricity, lifting restrictions on imports, and other measures.
India Objects to IMF Loan to Pakistan
India has repeatedly raised concerns about the use of the funds, claiming that the money is being used to fund cross-border terrorism. Defense Minister Rajnath Singh described the IMF aid as “a form of indirect funding to terror.”
On May 9, a day before the ceasefire between India and Pakistan, New Delhi criticized the IMF for its loan package, arguing that the funds are being misused. “In the 35 years since 1989, Pakistan has had disbursements from the IMF in 28 years. In the last 5 years since 2019, there have been 4 IMF programs. Had the previous programs succeeded in putting in place a sound macro-economic policy environment, Pakistan would not have approached the Fund for yet another bail-out program,” read the official statement issued by the Indian government.
Despite India’s abstention from the vote and its protest, the loan package was approved.
The situation highlights the complex diplomatic and economic challenges between the two nations, with the IMF playing a central role in mediating the dispute.