Islamabad, May 10, 2025 – The International Monetary Fund (IMF) has approved a fresh $2.4 billion IMF loan to Pakistan under two economic programmes. This decision comes as Pakistan faces ongoing economic challenges and seeks to strengthen its climate resilience and financial stability.

IMF Loan to Pakistan: Details and Purpose

Pakistan’s IMF loan to Pakistan is divided into two components. One is approximately $1 billion under the Extended Fund Facility (EFF), which finances Pakistan’s economic reform agenda. The EFF is meant for countries facing severe balance of payments issues and finances medium-term reform. With the latest release, Pakistan has received nearly $2.1 billion under the arrangement since September 2024.

Secondly, $1.4 billion under the Resilience and Sustainability Facility was approved by the IMF. The portion of IMF lending to Pakistan is in place to enable the nation to address risks due to climate change and disasters. The RSF is intended for enhanced response against disasters, improved use of water resources, and enhanced climate-risk management in Pakistan’s financial system.

Pakistan received international praise for achieving progress in its quest for economic recovery. The nation registered a primary budget surplus of 2% of GDP for the first half of FY 2025. The inflation rate fell as low as 0.3% in April, while its foreign exchange reserves had risen from $9.4 billion in August 2024 to $10.3 billion in April 2025. The IMF believes it will increase reserves to $13.9 billion by the end of June, thanks in part to the IMF loan to Pakistan.

India Raises Concerns Over IMF Loan to Pakistan

India had raised serious concerns regarding the IMF loan to Pakistan during the May 9 meetings of the IMF Executive Board. India’s Ministry of Finance issued a statement referencing Pakistan’s dismal record under IMF programs. India had singled out that Pakistan has availed of IMF lending for 28 out of the last 35 years. Pakistan has entered four IMF programs in the last five years alone.

India cautioned that the frequent IMF loan to Pakistan might be diverted for state-sponsored terrorism across borders. India contended that funding under these circumstances would have a perilous message for the global community and would place international contributors in reputational peril. Since there couldn’t have been a ‘no’ vote in the IMF board, India abstained from voting on the proposal.

India also insisted that global institutions like the IMF must include moral values in their processes. India’s apprehensions regarding misuse of Pakistan’s IMF loan to Pakistan were expressed by a number of fellow member countries in the meeting.

What’s Next for Pakistan’s Economy?

Pakistan gets an IMF loan to Pakistan under various conditions. The nation has been asked to enhance its fiscal discipline, widen its tax base, and overhaul its state-owned enterprises. The IMF has also asked Pakistan to enhance its provision of public goods and make its energy sector viable. These are intended to narrow the size of the role of the government in the nation in an effort to enhance opportunities for private investment.

The Pakistan IMF loan to Pakistan would have an RSF element that would address climate resilience. That encompasses increased coordination in responding to disasters, improved water management, and assistance for Pakistan’s global commitment to climate.

IMF Deputy Managing Director Nigel Clarke said,

“Pakistan has made important progress in restoring macroeconomic stability despite a challenging environment. The economy continues to recover, with inflation sharply lower and external buffers notably stronger. Risks remain, but the authorities need to maintain sound policies and speed up reforms to safeguard gains and support sustainable growth.”

Data: Recent IMF Loan to Pakistan

Conclusion

IMF loan to Pakistan is an important step for its economy and resilience against climate shocks. The step has also triggered serious concerns in India regarding the efficacy and potential misuse of such aid. The global community will closely monitor as Pakistan navigates through the IMF conditions in an attempt to make reforms and become stable by using the IMF loan to Pakistan.

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