IMF Defends $1 Billion Pakistan Bailout Despite India’s Objection

The International Monetary Fund (IMF) has stood by its move to release $1 billion to Pakistan despite being strongly opposed by India. In a formal statement, the IMF stated that Pakistan had “met all the required targets” that would make it eligible for the most recent payment of financial assistance.

This release is under the Extended Fund Facility (EFF) program launched in September 2024, under which Pakistan has thus far gotten around $2.1 billion in fiscal support to alleviate its economic squeeze.

IMF Justifies Decision

IMF communications department director Julie Kozack outlined the reason for the approval at a press conference. “Our Board discovered that Pakistan had actually achieved all of the targets. It had made some progress on a few of the reforms, and because of that, the Board proceeded and approved the program,” she said.

Kozack then went on to detail the timeline: “The first review was scheduled to take place in the first quarter of 2025. And in line with that schedule, on March 25 of 2025, the IMF staff and the Pakistani authorities agreed on a staff-level deal for the first review of the EFF. That agreement, that staff-level agreement, was then submitted to our Executive Board, which finalized the review on May 9. Consequently, Pakistan took the disbursement at that point.

Under the terms of the new financial agreement, Pakistan consented to 11 new conditions. These consisted of obtaining parliamentary consent, raising the debt servicing surcharge on electricity bills, and lifting import restrictions.

India Protests IMF Support

India protested vehemently the IMF’s continued financial assistance to Pakistan. New Delhi officials alleged the bailout money had the potential of being diverted to finance cross-border terrorism.

Defence Minister Rajnath Singh severely condemned the decision, saying that IMF loans to Pakistan equated to ‘a form of indirect funding to terror’.

On May 9, one day ahead of a ceasefire pact between India and Pakistan—India formally criticized the IMF’s financial bailout.

“Over 35 years since 1989, Pakistan has received IMF disbursements in 28 years. There have been 4 IMF programs in the past 5 years since 2019. If the earlier programs had been successful in establishing a macro-economic policy framework, Pakistan would not have come to the Fund seeking another bail-out program,” India’s official statement said.

Loan Disbursed Despite Objection

In spite of India’s abstention from the vote and making a formal protest, the IMF went ahead with the bailout package. The fund said it was satisfied with Pakistan’s reform work and adherence to the conditions agreed upon, reaffirming that the disbursement was justified.