IMF justifies bailout package to Pakistan despite India's objections

New Delhi: Despite India’s objections to the International Monetary Fund bailout package for Pakistan, the IMF has maintained that the debt-ridden country "met all the required targets" to qualify for the latest loan instalment.

The IMF recently approved a $1 billion (over Rs 8,000 crore) bailout package for Pakistan, even as India voiced concerns.

The financial aid was granted at a time when Pakistan was retaliating against India’s Operation Sindoor—a military strike targeting terror infrastructure in Pakistan and Pakistan-Occupied Kashmir (PoK).

India urged the IMF to reconsider the bailout, citing Pakistan’s role in allowing terrorists to use its territory for state-sponsored attacks against Indian citizens.

Last week, Defence Minister Rajnath Singh described the aid to Pakistan as a "form of indirect funding to terror" and cautioned international agencies, including the IMF.

The global lender disbursed $2.1 billion to Pakistan in two tranches under its Extended Fund Facility (EFF) programme. The IMF and Pakistan signed a $7 billion agreement under the EFF last year.

Defending its loan, the IMF's director of the communications department, Julie Kozack, said on Thursday, "Our Board found that Pakistan had indeed met all of the targets. It had made progress on some of the reforms, and for that reason, the Board went ahead and approved the programme."

Kozack also made a short statement with regards to the conflict between India and Pakistan and hoped for a peaceful resolution between the two countries. "With respect to Pakistan and the conflict with India, I want to start here by first expressing our regrets and sympathies for the loss of life and for the human toll from the recent conflict. We do hope for a peaceful resolution of the conflict," she said.

She said the IMF Executive Board had approved Pakistan's EFF programme in September of 2024. And the first review at that time was planned for the first quarter of 2025. “Consistent with that timeline, on March 25th of 2025, the IMF staff and the Pakistani authorities reached a staff-level agreement on the first review for the EFF. That agreement, that Staff-Level Agreement, was then presented to our Executive Board, and our Executive Board completed the review on May 9th. As a result of the completion of that review, Pakistan received the disbursement at that time.”

She said it was part of a standard procedure under programmes that the IMF Executive Board conducts periodic reviews of lending programs to assess their progress. “And they particularly look at whether the program is on track, whether the conditions under the program have been met, and whether any policy changes are needed to bring the program back on track. And in the case of Pakistan, our Board found that Pakistan had indeed met all of the targets. It had made progress on some of the reforms, and for that reason, the Board went ahead and approved the program,” she said.

Kozack stated that the Board had reached sufficient consensus to proceed with Pakistan's review and allow the IMF to move forward with its decision.

However, she cautioned that any deviation from the established programme conditions could affect future reviews for Pakistan.

(inputs from IANS)