“IMF Approves $1 Billion Loan to Pakistan Amid India-Pakistan Tensions: India Criticizes Timing and Intent”

The International Monetary Fund (IMF) on Friday approved an immediate disbursement of nearly $1 billion to Pakistan amid rising tensions with India.

New Delhi:

Jammu and Kashmir Chief Minister Omar Abdullah on Saturday criticized the International Monetary Fund (IMF) for approving a new loan of $1 billion to Pakistan at a time of escalating tensions with India.

Posting on X (formerly Twitter), Mr. Abdullah said, “I don’t understand how the ‘international community’ expects tensions in the subcontinent to ease when the IMF is effectively reimbursing Pakistan for all the ordnance it’s using to target Poonch, Rajouri, Uri, Tangdhar, and many other locations.”

On Friday, the IMF stated that its Executive Board had completed the first review of Pakistan’s economic reform program under the Extended Fund Facility (EFF), allowing for an immediate disbursement of approximately $1 billion.

This move came shortly after Pakistan’s military launched drones and missiles—carrying weapons—into western Indian cities and military installations. The disbursement brings the total funding under the EFF to approximately $2.1 billion for the cash-strapped nation.

In a statement, the Washington-based global lender said that Pakistan’s 37-month EFF program, approved on September 25, 2024, aims to “build resilience and enable sustainable growth,” including strengthening macroeconomic stability.

The IMF added that its Resilience and Sustainability Facility (RSF) will support Pakistan’s efforts to reduce vulnerability to natural disasters and build economic and climate resilience.On Friday, India expressed concerns about the effectiveness of IMF programs in the case of Pakistan, citing the country’s “poor track record,” and flagged the possibility of misusing loan funds for state-sponsored cross-border terrorism.

India’s Position on the IMF Loan to Pakistan:

After abstaining from voting in a key IMF meeting, India’s Finance Ministry released a statement saying, “Pakistan has long been a borrower from the IMF but has shown a very poor track record in implementing and complying with IMF program conditions. Over the last 35 years since 1989, Pakistan has been under IMF programs for 28 years.”

“In the past 5 years alone, since 2019, there have been 4 IMF programs. Had the earlier programs succeeded in creating a solid macroeconomic policy framework, Pakistan wouldn’t have needed another bailout,” the statement added.

India emphasized that such a track record raises questions about the “effectiveness” of IMF program designs for Pakistan and the country’s “monitoring or implementation” of those programs. The statement also noted, “Deep military interference in Pakistan’s economic affairs increases the risk of policy failures and reversal of reforms. Even under a civilian government, the military continues to play a dominant role in domestic politics and maintains its grip on the economy.”

Tensions between India and Pakistan have risen further following last month’s terrorist attack in Pahalgam, Jammu and Kashmir, which left 26 people dead.