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6d ago

IMF Tightens Conditions for Pakistan Loan, Highlights Risks from India Tensions

The IMF has imposed 11 new conditions on Pakistan's bailout and warned that escalating India-Pakistan tensions could jeopardize economic reform goals.

IMF squeezes Pakistan harder with 11 harsh demands tied to $1B bailout | Sharif
IMF
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Overview

  • The IMF approved a $2.4 billion loan package for Pakistan under the Extended Fund Facility and Resilience and Sustainability Facility on May 9, 2025.
  • A staff-level report released on May 17 outlined 11 additional conditions, bringing the total conditions to 50, including parliamentary approval of a Rs 17.6 trillion budget and energy sector reforms.
  • The IMF explicitly flagged rising India-Pakistan tensions as a threat to Pakistan's fiscal, external, and reform objectives, following recent cross-border strikes and retaliatory actions.
  • India abstained from voting on the loan, citing concerns about potential misuse of funds for terror financing and Pakistan's history of poor compliance with IMF programmes.
  • Opposition leaders in India criticized the Modi government for abstaining rather than opposing the loan, while Defence Minister Rajnath Singh called for the IMF to reconsider its financial support to Pakistan.