IMF Loan to Pakistan: Fresh Scrutiny Amid India-Pakistan Conflict

In May 2025, the International Monetary Fund disbursed another $2.4 billion to Pakistan—$1 billion under its $7 billion Extended Fund Facility (EFF) and $1.4 billion under the Resilience and Sustainability Facility (RSF).

- DR. S. KRISHNAN, LABDHI TERVECHA, SUKRITI GAUR

These disbursements were made despite Pakistan's recent escalation of hostilities along the Line of Control, a deadly cross-border attack that claimed civilian lives in Pahalgam, and amidst ominous nuclear sabre-rattling.

Let that sink in. A country under scrutiny for cross-border aggression is receiving billions in international aid with minimal political or strategic conditions.

Long-Standing Relationship of Pakistan with IMF

Faced with structural weakness in the economy, long-term balance of payment issues, and external shocks, the prime minister of the Pakistani government, Shehbaz Sharif, has once again turned to support from the IMF. The IMF and Pakistan have a long historical relationship: since Pakistan joined the fund in 1950, the IMF has provided a total of 24 programs to the country, and Pakistan is one of the largest IMF debtors after countries such as Argentina, Egypt, and Ukraine.

Despite continued assistance from the IMF, the Pakistani economy has failed to take off, even as other Asian countries, including in South Asia, have done so. Pakistan's current economic issues highlight a complex interplay between poor economic management decisions, foreign policy strategies that have undermined growth and domestic stability, and misguided IMF loans that sustained debt dependencies while enforcing severe austerity measures.

Pakistan has received repeated IMF support since 1988, with over 20 loan programmes approved—often justified by its large population, fragile economy, and geostrategic location. The current $7 billion EFF was approved in 2024 after a previous short-term bailout ended, continuing a decades-long pattern of financial rescue despite limited structural reform.