IMF clears loan tranche to Pakistan; India abstains from vote, registers 'strong dissent'

 

As of May 2025, Pakistan has secured significant financial support from the International Monetary Fund (IMF) to stabilize its economy and address climate-related vulnerabilities.

💰 IMF Loan Programs for Pakistan

1. Extended Fund Facility (EFF) – $7 Billion (2024–2027):

#In September 2024, the IMF approved a 37-month Extended Fund Facility for Pakistan, totaling approximately $7 billion.

#Following the first program review in May 2025, the IMF released an additional $1 billion, bringing total disbursements under the EFF to about $2.1 billion.

2.Resilience and Sustainability Facility (RSF) – $1.4 Billion:

#Concurrently, the IMF approved a $1.4 billion loan under the RSF to support Pakistan's efforts in building resilience against climate change and natural disasters

📈 Economic Impact and Reforms

The IMF commended Pakistan for implementing key policy reforms that have contributed to macroeconomic stabilization and renewed investor confidence. These reforms include:

#Enhancing tax collection mechanisms.

#Reducing energy subsidies.

#Allowing a market-based exchange rate.

These measures have led to a decline in inflation and an improvement in foreign exchange reserves.

⚠️ Geopolitical Tensions and Concerns

#The IMF's recent approval of loan disbursements to Pakistan has faced criticism from India. India abstained from the IMF vote, expressing concerns that the funds could be misused to support activities detrimental to regional stability.

#In response, Pakistani Prime Minister Shehbaz Sharif dismissed these objections, emphasizing that the IMF's decisions are based on Pakistan's economic performance and reform commitments.

🔍 Historical Context

#Pakistan has a long-standing relationship with the IMF, having entered into 25 loan arrangements since joining the organization in 1950. The current EFF is part of ongoing efforts to address structural economic challenges and reduce reliance on external financing.