IMF Approves $1 Billion Disbursement to Pakistan Despite India’s Objections
By: Arvind Jadhav
New Delhi: The International Monetary Fund has approved a $1 billion disbursement to Pakistan under the Extended Fund Facility, aimed at stabilizing the country’s economy. This decision follows strong objections from India, which vehemently opposed the loan due to concerns over Pakistan’s trackhyaad with IMF programs and potential misuse of funds for state-sponsored cross-border terrorism. India formally protested during the IMF Executive Board meeting, abstaining from voting and warning that such financial support could be diverted to fund activities linked to terrorism, sending a “dangerous message to the global community.” The Indian Ministry of Finance stated, “Rewarding continued sponsorship of cross-border terrorism sends a dangerous message to the global community, exposes funding agencies and donors to reputational risks, and undermines global values.”
Background and Reactions
Pakistan’s Prime Minister Shahbaz Sharif welcomed the approval, stating that it would help stabilize the economy and support long-term recovery. He emphasized that the IMF program would be a significant step towards achieving economic stability and growth. The approval has been seen as a crucial step in Pakistan’s economic recovery efforts. In response to India’s objections, Pakistan’s Foreign Office spokesperson stated, “India’s stance is driven by its own vested interests and attempts to isolate Pakistan internationally.”
Economic Impact and Reforms
The $1 billion disbursement brings total disbursements under the loan program to approximately $2 billion. Pakistan is eligible for seven equal installments of about $1 billion, contingent on successful reforms in tax restructuring, energy sector reforms, and pricing adjustments. These reforms are expected to have a positive impact on Pakistan’s economy, helping to stabilize the country’s finances and promote sustainable growth.
Reactions from India
Indian politician and former Finance Minister, P. Chidambaram, criticized the IMF’s decision, saying, “The IMF’s decision to disburse $1 billion to Pakistan despite India’s objections raises questions about the institution’s credibility and its commitment to combating terrorism.” Another Indian politician, BJP MP Subramanian Swamy, tweeted, “IMF’s decision to give $1 billion to Pakistan is a reward for terrorism. It will only embolden Pakistan to continue its nefarious activities in Jammu and Kashmir.”
Future Outlook and Expectations
Prime Minister Sharif expressed optimism that this would be Pakistan’s final IMF-backed program, highlighting the government’s commitment to macroeconomic stability and sustainable growth. The IMF’s support is expected to help Pakistan achieve economic resilience and create conditions for stronger growth. With the IMF’s assistance, Pakistan aims to stabilize its economy and promote long-term economic development.
