Days After India’s Message, IMF Stands By Bailout Package To Pakistan
The International Monetary Fund (IMF) last week imposed 11 new conditions on Pakistan to release the next installment of its bailout program.
New Delhi:
The International Monetary Fund (IMF) has justified the $1 billion (over Rs 8,000 crore) bailout package to Pakistan, stating that the debt-trapped nation “met all the required targets” to get the last instalment of the loan. The IMF disbursed the funds while Pakistan was occupied with random firing on India following the Indian army’s launch of Operation Sindoor – a military operation against terror infrastructure in Pakistan and Pakistan-Occupied Kashmir (PoK).
The IMF’s rationale arrives days after India requested that it re-evaluate its $2.1 billion bailout of Pakistan because it permits terrorists to utilize its territory for carrying out state-sponsored attacks on Indian citizens. Defence Minister Rajnath Singh recently stated that the assistance to Pakistan is a “form of indirect funding to terror”.
The IMF extended $2.1 billion to Pakistan in two tranches under its Extended Fund Facility (EFF) programme. The global lender and Pakistan signed a contract for $7 billion under the EFF last year.
Justifying its loan, IMF communications department director Julie Kozack stated, “Our Board concluded that Pakistan had actually achieved all of the targets. It had made good progress on some of the reforms, and because of that, the Board proceeded and approved the program.”
“The initial review was to be done in the first quarter of 2025. And in line with that timing, on March 25 of 2025, IMF staff and the Pakistani authorities agreed on staff-level terms for the first review of the EFF. That staff-level agreement was thereafter submitted to our Executive Board, which finalized the review on May 9. Pakistan thus received the disbursement at that time,” she further clarified in a press briefing.
Ms Kozack also talked about the war between India and Pakistan and wished for the conflict between them to be resolved peacefully.
“In regard to Pakistan and the conflict with India, I would like to begin here by first offering our regrets and sympathy for the loss of life and for the human costs of the recent conflict. We do hope for a peaceful resolution of the conflict,” she stated.
IMF’s 11 conditions to Pakistan
The global monetary fund last week imposed 11 new conditions on Pakistan for release of the following tranche of its bailout plan and said that strains with India may increase risks to the scheme’s fiscal, external, and reform objectives. The new terms, according to a report, comprise parliamentary approval of a new Rs 17.6 trillion budget, raising the debt servicing surcharge on electricity bills, and removing the ban on the import of over three-year-old second-hand cars, among others.
Another requirement is that the government will come up with and put out a plan demonstrating the post-2027 financial sector strategy of the government, describing the institutional and regulatory framework of 2028 and beyond. Parliament will also enact legislation to legalize the captive power levy ordinance into a law by the end of the current month, the IMF stated.
The IMF has also mandated that Pakistan will come up with a plan based on the study done to completely phase out all incentives in connection with Special Technology Zones and other industrial parks and zones by 2035.
