Overview

• The IMF approved a $1 billion disbursement to Pakistan on May 9, 2025, citing compliance with Extended Fund Facility (EFF) targets and progress on reforms.
• India has formally protested the bailout, labeling it indirect support for terrorism, and plans to lobby the World Bank and FATF to limit Pakistan's access to external financing.
• The IMF imposed 11 new conditions for future tranches, including parliamentary budget approval, increased electricity surcharges, and a long-term financial strategy post-2027.
• The IMF emphasized safeguards to prevent misuse of funds, stating that disbursements are allocated to Pakistan's central bank reserves, not its government budget.
• India has raised concerns over Pakistan's defense spending, citing data showing increased arms imports during years with IMF funding, and has called for Pakistan's return to the FATF grey list.