In a move drawing sharp criticism from New Delhi, the International Monetary Fund (IMF) has approved a $1 billion disbursement to Pakistan under its $7 billion Extended Fund Facility (EFF). The announcement was confirmed by Pakistan Prime Minister Shehbaz Sharif’s office, which called the approval a “positive step” for the country’s economy.
This disbursement comes amid heightened India-Pakistan tensions following the April 22 Pahalgam terror attack, which killed 26 civilians. India has strongly opposed the IMF’s decision, warning that such financial aid could indirectly support state-sponsored terrorism.
IMF Disburses Funds Despite Regional Tensions
According to the Pakistani government, the IMF executive board has cleared the first review, bringing total disbursements under the package to $2 billion. The IMF had already reached a staff-level agreement with Pakistan before the recent surge in regional hostilities, including India’s Operation Sindoor.
However, India’s finance officials have raised serious objections. In a statement presented to the IMF board, India argued that lending to a country “involved in cross-border terrorism” sends the wrong message to the global community and poses reputational risks to international institutions.
India Warns of Terror Funding Risks
The Indian government pointed out that financial aid—although meant for economic stabilization—is fungible and could be misused to support military or extremist operations.
“Rewarding continued sponsorship of cross-border terrorism sends a dangerous message… and makes a mockery of global values,” India said in a formal protest note to the IMF.
India’s opposition extends not only to the $1 billion EFF disbursement but also to an additional $1.3 billion proposed under the IMF’s Resilience and Sustainability Facility (RSF) for Pakistan.
🧭 What’s Next?
While Pakistan views the funding as crucial for its economic recovery, India’s concerns bring to light the geopolitical risks tied to global financial aid. With the IMF remaining silent on India’s objections post-approval, the debate over fiscal responsibility vs. international security is likely to continue.
