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The International Monetary Fund (IMF) on Friday approved the first review of Pakistan’s $7 billion Extended Fund Facility (EFF), releasing a $1 billion cash tranche to the financially strained country currently locked in a heightened conflict with India following the April 22 Pahalgam terror attack.
In its board meeting held Friday, the IMF also approved a $1.3 billion tranche under the Resilience and Sustainability Facility (RSF), taking the total disbursement to $2.3 billion. India, however, abstained from voting during the meeting, voicing serious reservations over Pakistan’s track record with IMF-funded programmes and the potential diversion of fungible funds toward state-sponsored terrorism.
India Raises Red Flags on Terror Financing
The Indian Ministry of Finance, in an official statement, said that New Delhi had conveyed its “strong dissent” to the IMF Board, highlighting concerns about the misuse of international financial aid. “India raised concerns over the efficacy of IMF programmes for Pakistan given its ‘poor track record’ and also on the possibility of ‘misuse of debt financing funds for state-sponsored cross-border terrorism’,” the statement read.
Echoing these concerns, several IMF member countries also expressed unease about the risk of international inflows being redirected towards military activities or militant groups operating with indirect state support.
Foreign Secretary Vikram Misri underlined the sentiment with pointed remarks, “The case with regard to Pakistan should be self-evident to those people who generously open their pockets to bail out this country… I think you would also have an idea on how many of those programmes have reached successful conclusions. Probably, not many. So, this is a decision that (IMF) Board members have to take by looking deep within themselves and looking at the facts.”
IMF Approvals and Pakistan’s Financial Struggles
According to Reuters, the Pakistani government welcomed the IMF’s decision, stating that the $1 billion disbursed following the first review adds to the total $2 billion already released under the current $7 billion programme agreed in 2024. The IMF package is aimed at providing critical support to Pakistan’s struggling economy amid soaring inflation, depreciating currency, and a balance of payments crisis.
This marks Pakistan’s 24th bailout programme with the IMF since 1958, underlining the country’s long-standing dependence on external financial assistance. Despite repeated engagements, critics argue that Pakistan has made little progress on long-term structural reforms.
A History of IMF Bailouts to Pakistan
A comprehensive review of IMF lending to Pakistan reveals a recurring cycle of borrowing and short-term fixes. The Observer Research Foundation, compiling data from IMF records, listed the following major facilities extended to Pakistan:
| Arrangement | Start Date | End Date | Amount Drawn (in ‘000s SDR) |
|---|---|---|---|
| Rapid Financing Instrument | 16-Apr-2020 | 20-Apr-2020 | 1,015,500 |
| Extended Fund Facility | 03-Jul-2019 | 30-Jun-2023 | 3,038,000 |
| Extended Fund Facility | 04-Sep-2013 | 30-Sep-2016 | 4,393,000 |
| Standby Arrangement | 24-Nov-2008 | 30-Sep-2011 | 4,936,035 |
| Extended Credit Facility | 06-Dec-2001 | 05-Dec-2004 | 861,420 |
| Standby Arrangement | 29-Nov-2000 | 30-Sep-2001 | 465,000 |
| Extended Fund Facility | 20-Oct-1997 | 19-Oct-2000 | 113,740 |
| Extended Credit Facility | 20-Oct-1997 | 20-Oct-1997 | 265,370 |
| Standby Arrangement | 13-Dec-1995 | 30-Sep-1997 | 294,690 |
| Extended Credit Facility | 22-Feb-1994 | 13-Dec-1995 | 172,200 |
| Extended Fund Facility | 22-Feb-1994 | 04-Dec-1995 | 123,200 |
| Standby Arrangement | 16-Sep-1993 | 22-Feb-1994 | 88,000 |
| Structural Adjustment Facility | 28-Dec-1988 | 27-Dec-1991 | 382,410 |
| Standby Arrangement | 28-Dec-1988 | 30-Nov-1990 | 194,480 |
| Extended Credit Facility | 02-Dec-1981 | 23-Nov-1983 | 730,000 |
| Extended Fund Facility | 24-Nov-1980 | 01-Dec-1981 | 349,000 |
| Standby Arrangement | 09-Mar-1977 | 08-Mar-1978 | 80,000 |
| Extended Credit Facility | 11-Nov-1974 | 10-Nov-1975 | 75,000 |
| Standby Arrangement | 11-Aug-1973 | 10-Aug-1974 | 75,000 |
| Standby Arrangement | 18-May-1972 | 17-May-1973 | 84,000 |
| Standby Arrangement | 17-Oct-1968 | 16-Oct-1969 | 75,000 |
| Standby Arrangement | 16-Mar-1965 | 15-Mar-1966 | 37,500 |
| Standby Arrangement | 08-Dec-1958 | 22-Sep-1959 | 0 |
Total Amount Drawn: 17,848,545 SDR
(Source: Observer Research Foundation, IMF)
IMF Reforms and Grassroots Impact
Despite IMF insistence on structural reforms, Pakistan has been slow to implement meaningful changes. Key reforms—such as expanding the tax base, reducing unsustainable subsidies, and privatising loss-making public-sector enterprises—have seen limited progress.
According to the Observer Research Foundation, austerity measures tied to IMF programmes, including sharp hikes in fuel and energy prices, have disproportionately affected the poor. These have triggered strikes, rising emigration, and widespread social discontent.
India’s Call for Accountability
India’s abstention and objections at the IMF board reflect a broader concern over institutional accountability in conflict zones. Officials in New Delhi argue that, without rigorous safeguards and oversight mechanisms, financial support to Pakistan risks indirectly enabling terrorism.
The backdrop to this diplomatic rift is the Pahalgam terror attack on April 22, which India has attributed to militants backed by Pakistani state institutions, including the Inter-Services Intelligence (ISI).
Also Read: IMF Approves $2.3 Billion Package for Pakistan Amid Strong Objections from India
