IMF Clears $1 Billion Loan to Pakistan Amid India’s Objection
The International Monetary Fund has approved the disbursement of a $1 billion loan to Pakistan under its Extended Fund Facility (EFF), despite serious objections raised by India. This latest tranche brings Pakistan’s total disbursement under the program to $2 billion. Additionally, Pakistan secured another $1.4 billion through the Resilience and Sustainability Facility to enhance climate resilience and infrastructure.
This financial support comes as part of a broader economic stabilization initiative aimed at addressing Pakistan’s persistent fiscal vulnerabilities. However, this move has triggered diplomatic backlash from India, which abstained from the vote and openly criticized the IMF’s decision to continue funding a state allegedly supporting cross-border terrorism.
India Flags Cross-Border Terrorism Risks
India, in its official response, stated: “Rewarding continued sponsorship of cross-border terrorism sends a dangerous message to the global community, exposes funding agencies and donors to reputational risks, and undermines global values.”
Indian officials pointed out that Pakistan has received IMF assistance 28 times in the past 35 years and has entered four separate programs in the last five years. According to New Delhi, this continued financial support has failed to yield any meaningful structural reforms and instead may be enabling malign activities.
Pakistan Claims Victory Over Diplomatic Pushback
Pakistan’s Prime Minister Shehbaz Sharif called the IMF’s approval a win against “Indian attempts to sabotage the program,” describing the move as a vote of international confidence in Pakistan’s economy. He claimed that the efforts to block the loan were part of “India’s high-handed tactics,” which he says have now been defeated.
Rising Tensions Amid Terror Allegations
The development follows a deadly terror attack in Kashmir on April 22, in which 26 Hindu pilgrims lost their lives. India has blamed Pakistan-based terrorist groups for the attack, accusations which Pakistan has denied. In response, tensions have escalated with border closures, restricted airspace, suspended bilateral trade, and military preparedness from both nations.
India also cited concerns that external loans are being diverted toward military expansion and terror funding. Pakistan, meanwhile, conducted missile tests amid the standoff, a move that has drawn further scrutiny.
Geopolitical and Economic Implications
Amid these concerns, international financial observers have expressed reservations about how such funds are being utilized, especially in light of regional instability. Despite IMF’s praise for Pakistan’s fiscal policy adjustments, critics argue that the timing and context of this financial aid raise serious ethical and strategic questions.
