By Staff Reporter
ISLAMABAD: The International Monetary Fund on Friday approved a $1 billion disbursement to Pakistan under its Extended Fund Facility, brushing aside India’s attempts to persuade the lender to withhold the funds.
New Delhi had pressed the IMF to review loans to Pakistan, a move Islamabad called a ploy to derail its economic recovery. The decision, which lifts total disbursements under the $7 billion, three-year program to about $2 billion, marks a setback for India’s efforts to influence the bailout.
Prime Minister Shehbaz Sharif hailed the approval as a direct rebuff to New Delhi’s “high-handed tactics.” “International institutions have responsibly rejected India’s false propaganda,” Sharif’s office quoted him as saying in a statement. “Indian attempts to sabotage the IMF programme have failed.”
The prime minister credited his government’s policies for economic gains over the past 14 months. @The funds would help stabilise the economy and steer it toward sustained growth.”
The IMF’s move comes amid rising tensions between the nuclear-armed neighbors. India has launched missile and drone strikes on Pakistan since May 7, following attacks in occupied Kashmir last month that killed 26 people. India, which had pressed the IMF to scrutinize Pakistan’s loans, saw its objections sidelined.
Against this backdrop, Sharif emphasized the government’s focus on tax reform, energy sector improvements, and private sector growth to maintain economic momentum.
The approval follows a staff-level agreement on March 25 during the facility’s first biannual review of $7 billion programme. Pakistan committed to reforms including a carbon levy, electricity tariff adjustments, higher water pricing, and automobile sector liberalization—measures tied to further disbursements under the 39-month program.
The staff-level agreement also approved a new 28-month Resilience and Sustainability Facility (RSF) arrangement, worth $1.3 billion for climate projects. Unlike the bailout’s biannual reviews, RSF funds are contingent on specific policy milestones.
Pakistan and the IMF had reached the $7bn aid package deal in July. The IMF’s Executive Board approved the programme in the last week of September.
Pakistan’s next IMF mission will finalize the 2025-26 budget, due in early June, with fiscal consolidation efforts ongoing. Key reforms, including the carbon levy and water pricing changes, are slated for phased implementation from July 1.
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