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IMF Gives $1 Billion Loan to Pakistan Despite India’s Concerns

The International Monetary Fund (IMF) has approved a $1 billion loan for Pakistan under its ongoing economic reform support program. This move comes even as India raised serious concerns about how Pakistan may use such financial aid.

Loan Approved Under IMF’s Economic Program

Pakistan received this funding as part of the Extended Fund Facility (EFF), which aims to stabilize the country’s struggling economy. With this latest approval, the total amount Pakistan has received under the program has now reached about $2.1 billion.

The IMF board completed the first official review of Pakistan’s reform progress under the EFF and authorized the immediate release of approximately 760 million Special Drawing Rights (SDRs), which is equal to around $1 billion.

New Funding Facility Also Approved

In addition to the EFF loan, the IMF also approved Pakistan’s request for a fresh line of credit under the Resilience and Sustainability Facility (RSF). This could provide up to $1.4 billion (around 1 billion SDRs) in future assistance focused on long-term growth and climate resilience.

The IMF said Pakistan’s 37-month EFF program, approved in September 2024, aims to support macroeconomic stability and enable sustainable development. The organization noted progress in areas such as structural reforms and fiscal discipline.

India Did Not Support the IMF Decision

India has expressed opposition to the IMF’s continued support to Pakistan. Citing concerns over terrorism and misuse of funds, India chose not to participate in the voting process during the IMF board meeting.

In a statement, India’s Finance Ministry said that giving loans to a country that continues to support cross-border terrorism sends a dangerous message to the global community. India added that such actions damage the credibility of international financial institutions and undermine global values.

Concerns Over Military Involvement in Pakistan’s Economy

India also pointed out that Pakistan’s military plays a dominant role in the country’s politics and economy. Referring to a 2021 UN report, India noted that military-run businesses were identified as the largest corporate group in Pakistan.

The Indian government fears that funds provided by institutions like the IMF could be diverted from economic reforms and used for military or terrorist activities. Despite these objections, the IMF said its decision was based on technical criteria and Pakistan’s commitment to reform.

Pakistan Welcomes the Decision

Pakistan’s Prime Minister Shehbaz Sharif welcomed the IMF loan, calling it vital for the country’s financial stability. The government hopes the funds will help restore investor confidence, stabilize the rupee, and control inflation.

Conclusion:

While the IMF aims to support Pakistan’s economy through structured loans, the move has stirred diplomatic tensions with India. Concerns over potential misuse of funds remain, highlighting the broader issue of accountability in global financial aid.

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