The International Monetary Fund on Friday approved a loan programme review for Pakistan, unlocking around $1 billion in much-needed funds and greenlighting a new $1.4 billion bailout despite India鈥檚 objections.
Pakistan came to the brink of default in 2023, as a political crisis compounded an economic downturn and drove the nation鈥檚 debt burden to terminal levels.
It was saved by a $7 billion bailout from the IMF鈥攊ts 24th since 1958.
鈥楾he authorities have demonstrated strong programme implementation, which has contributed to improving financing and external conditions, and a continuing economic recovery,鈥� the IMF said in a statement, noting the board鈥檚 approval of the first loan review, confirming earlier press reports.
The board also approved the authorities鈥� request for a new loan programme worth around $1.4 billion, designed to support the country鈥檚 鈥榚fforts in building economic resilience to climate vulnerabilities and natural disasters.鈥�
India鈥攚hich also represents Bhutan, Sri Lanka, and Bangladesh on the IMF board鈥攁bstained amid the ongoing tensions with Pakistan.
An individual with knowledge of the matter, who was not authorised to speak publicly, confirmed to AFP that all four countries had effectively abstained as a result of India鈥檚 decision.
In a statement explaining its decision, India鈥檚 finance ministry voiced 鈥榗oncerns over the efficacy of IMF programmes in case of Pakistan given its poor track record.鈥�
New Delhi also flagged the possibility that the money could be used by Pakistan 鈥榝or state-sponsored cross-border terrorism.鈥�
The IMF board decision came amid an escalation in conflict between India and Pakistan, with more than 50 people dead after three days of missile, artillery and drone attacks.