The International Monetary Fund has stood by its decision to release $1 billion to Pakistan, affirming that the country had fulfilled the reform conditions outlined in the Extended Fund Facility (EFF) agreement. This financial aid was provided amid rising tensions between India and Pakistan, triggered by India’s Operation Sindoor—a targeted military campaign against purported terror locations in Pakistan and Pakistan-Occupied Kashmir. India strongly criticized the IMF’s decision, expressing firm disapproval of the disbursement. Defence Minister Rajnath Singh stated that offering any support to Pakistan amounted to indirectly funding terrorism.
Despite such claims, the IMF maintained that its financial assistance was based strictly on economic benchmarks and progress.
Julie Kozack, the IMF’s Director of Communications, explained in a media briefing that Pakistan had fulfilled all the goals outlined in the initial loan agreement. “On May 9, 2025, following a staff-level agreement finalized on March 25, the IMF Board approved the $1 billion disbursement, acknowledging substantial progress in structural reforms,” she explained.
In light of ongoing India-Pakistan hostilities, Kozack extended condolences for lives lost and expressed hope for a peaceful resolution, emphasizing that the IMF remains focused on economic recovery and stability, not political conflict.
However, the path ahead for Pakistan remains demanding. For the remaining payments under the $7 billion agreement—of which $2.1 billion has been released so far—the IMF has introduced 11 new requirements. These include approval of a $17.6 trillion federal budget, raising the power sector’s debt servicing surcharge, ending the ban on older used car imports, and establishing permanent laws around captive power levies. The IMF also expects a post-2027 financial strategy and a complete phase-out of all Special Technology Zone incentives by 2035.
The IMF cautioned that further regional instability may obstruct Pakistan’s reform trajectory and financial recovery efforts. As Pakistan attempts to stabilize its economy, the global lender will continue monitoring progress closely before releasing the remaining funds under the multibillion-dollar arrangement.
