IMF Justifies $1 Billion Loan To Pakistan; Cites Compliance With Program Targets

Despite India’s objections, the International Monetary Fund (IMF) has defended its recent decision to release a $1 billion bailout instalment to Pakistan, stating that the country met all necessary benchmarks under the lending agreement.

The approval, part of an ongoing $7 billion Extended Fund Facility (EFF) deal signed in 2024, came shortly after India conducted ‘Operation Sindoor’ – a military strike targeting terror infrastructure in Pakistan and Pakistan-Occupied Kashmir (PoK).

India had urged the IMF to reconsider the financial support, citing Pakistan’s continued backing of state-sponsored terrorism.

India’s Defence Minister Rajnath Singh recently criticised the bailout, warning global institutions that such aid could effectively fund terrorism.

In its defence, IMF communications director Julie Kozack said on Thursday that Pakistan had met all stipulated targets for the current review.

“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 programme,” she stated.

Kozack also addressed the broader tensions between India and Pakistan, offering condolences for the loss of life and expressing hope for a peaceful resolution.

“With respect to Pakistan and the conflict with India, I want to start here by first expressing our regrets and sympathies for the loss of life and for the human toll from the recent conflict. We do hope for a peaceful resolution of the conflict,” she remarked.

Review Timeline & Disbursement Details

Providing a timeline of events, Kozack noted that Pakistan’s EFF program, approved in September 2024.

A first review, planned for early 2025, led to a Staff-Level Agreement on 25 March, followed by the Board’s formal review and approval on 9 May.

The latest disbursement brings Pakistan’s total received under the program to $2.1 billion.

She emphasised that periodic reviews are standard in IMF lending arrangements to ensure countries stay on track with agreed reforms.

“And they particularly look at whether the program is on track, whether the conditions under the program have been met, and whether any policy changes are needed to bring the program back on track. And in the case of Pakistan, 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,” she explained.

Kozack added that there was adequate consensus within the Board to proceed with the disbursement to Pakistan.

However, she cautioned that any failure to meet program conditions in the future could impact subsequent reviews.

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