IMF Approves $1 Billion Loan for Pakistan Despite India’s Strong Objection

India cites terror funding concerns, questions Pakistan’s reform credibility and military interference in economy

Washington DC [US], May 10: The International Monetary Fund (IMF) has approved the first review of Pakistan’s economic reform program under the Extended Fund Facility (EFF), unlocking a disbursement of approximately USD 1 billion. However, the move has drawn strong criticism from India, which warned that supporting a state that sponsors cross-border terrorism carries reputational risks for global institutions.

In a post on X, the IMF stated, “IMF Board approved the first review of Pakistan’s economic reform program under the EFF, enabling a disbursement of ~ $1 billion, reflecting strong program implementation which has contributed to continuing economic recovery.”

India’s objection was registered during the IMF’s review of both the USD 1 billion EFF and a proposed USD 1.3 billion Resilience and Sustainability Facility (RSF). According to sources, India abstained from the vote, not due to silence but because the IMF’s rules prohibit a formal “no” vote. Instead, New Delhi lodged a formal protest.

India raised several key concerns:

• Repeated bailouts: Pakistan has received IMF support in 28 of the last 35 years, with four loan programs in the past five years alone, without demonstrating lasting structural reform.
• Misuse of funds: India flagged the potential diversion of funds to support state-sponsored cross-border terrorism.
• Military dominance: The Indian delegation criticized the Pakistani military’s deep involvement in economic decisions, citing a 2021 UN report that labeled military-linked businesses as Pakistan’s largest economic conglomerate. The military’s role in Pakistan’s Special Investment Facilitation Council was also highlighted.

India argued that continued IMF support without accountability could undermine global norms, especially when the recipient is accused of harboring terror groups.

The IMF board, composed of 25 directors, operates on consensus, with voting power weighted by economic size. Although India voiced concerns, countries like the United States carry disproportionate influence in such decisions.

India reiterated its call for global institutions to align financial decisions with moral responsibility and international security considerations, especially when evaluating countries with poor governance and a history of terrorism sponsorship.