Desk Report: Amid India-Pakistan Tensions, Pakistan Receives Another IMF Loan Tranche
Amid ongoing tensions with India, Pakistan has received another loan installment from the International Monetary Fund (IMF). The State Bank of Pakistan (SBP) announced on Wednesday via X (formerly Twitter) that it has received the second tranche of $760 million under the Extended Fund Facility (EFF) program. The SBP stated that this amount will reflect in its foreign exchange reserves for the week ending May 16.
Just last week, the IMF had approved a disbursement of $1 billion to Pakistan. On Friday, the IMF confirmed that its Executive Board had completed the first review of the $7 billion program with Pakistan, clearing the way for the release of approximately $1 billion in funds.
According to a statement issued by the Pakistani Prime Minister’s Office on May 9, Prime Minister Shehbaz Sharif expressed satisfaction over the IMF’s decision to release the installment and termed it a failure of India’s “arbitrary strategy” against Pakistan. The statement further claimed that Pakistan’s economic indicators were improving and that the country was moving towards development.
India, however, raised strong concerns regarding the IMF bailout. It abstained from voting on the $1.3 billion IMF loan package for Pakistan last Friday and questioned the effectiveness of the Fund’s programs. India also expressed apprehension over the potential misuse of IMF loans in financing cross-border terrorism sponsored by Pakistan.
In a statement issued by the Indian Ministry of Finance, India criticized Pakistan’s poor track record in effectively utilizing previous financial aid. New Delhi pointed out that Pakistan has been a long-standing borrower of the IMF but has repeatedly failed to comply with the program’s conditions.
India highlighted that out of the past 35 years since 1989, Pakistan has received IMF loans during 28 of those years. Since 2019 alone, Pakistan has entered into four separate IMF programs. If previous programs had successfully established a stable macroeconomic environment, Pakistan would not be seeking yet another bailout, India argued.
Such a track record, India stated, raises serious questions about the effectiveness of IMF program designs, the robustness of its oversight, and Pakistan’s sincerity in implementing the agreed reforms.