The terror attack on tourists in Jammu and Kashmir's Pahalgam district has reignited suspicions of Pakistan's covert support for terrorist groups, prompting the question if India will intensify its objections to IMF's bailout packages for Islamabad, which have been crucial in rescuing the financially strained country from Balance of Payment crisis and soaring inflation.
The International Monetary Fund (IMF) has been bailing out Pakistan’s economy for several years, as its biggest donors US as well as China would want to avoid a failed nation in a key geopolitical region. As of February 2020, the IMF had extended about 22 various loans to Pakistan, owing to its strained economic situation.
Just last month, the IMF once again reached a staff-level agreement for a $1.3 billion loan package for Pakistan for a period of 28 months to support the country's efforts to mitigate and adapt to climate change. This has brought total disbursements for Pakistan under IMF's Extended Fund Facility (EFF) to about $2 billion.
The latest funding is on top of an ongoing 37-month IMF bailout, worth $7 billion, that has helped Pakistan avert a default.
The IMF statement issued in March 2025 said the Pakistani authorities remained "committed to advancing a gradual fiscal consolidation to sustainably reduce public debt," along with tight monetary policy, cost-cutting measures and reforms, as they agreed in principle to the second review of the existing 37-month programme.
The agency added that downside risks such as ‘geopolitical shocks to commodity prices, tightening global financial conditions, or rising protectionism’ could undermine Pakistan’s ‘hard-won macroeconomic stability’.
India’s Role in Pakistan’s IMF Bailouts
India has usually abstained from voting on Pakistan’s frequent requests for IMF. In line with the stance, New Delhi once again abstained from voting on Pakistan’s stand-by arrangement (SBA) loan request to the IMF in the executive board meeting in 2023.
On July 12, 2023, the IMF’s executive board approved a nine-month SBA for Pakistan worth about $3 billion to support the country’s economic stabilisation programme.
“India conveyed its stance to abstain from Pakistan’s SBA request at the IMF via executive Board meeting on 12th July, 2023,” the Finance Ministry said in its monthly summary for Cabinet.
Then in 2024, in a shift from its usual stance, India reportedly batted for ‘stringent monitoring’ of any emergency funds provided by the IMF to Pakistan, emphasising that such funds should not be redeployed towards defence bills or repayment of loans from other countries.
“Such monitoring is imperative to ensure that funds received to meet development imperatives are not diverted towards defence spending and repayment of external debt owed to third countries,” India had reportedly told IMF’s executive board.
The IMF’s support for Pakistan is key, as it has helped the cash-strapped nation avoid one crisis after another, owing to dwindling forex reserves and rising inflation.
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