IMF Approves $1 Billion Loan to Pakistan Amid India's Objections

 IMF Approves $1 Billion Loan to Pakistan Amid India's Objections

The International Monetary Fund (IMF) has approved a $1 billion disbursement to Pakistan under its Extended Fund Facility (EFF), despite strong objections from India. This approval follows the IMF's first review of Pakistan's economic reform program, which aims to stabilize the country's economy and build resilience against climate-related challenges.

In addition to the $1 billion disbursement, the IMF has greenlit a new $1.4 billion loan under the Resilience and Sustainability Facility (RSF) to support Pakistan's efforts in building economic resilience to climate vulnerabilities and natural disasters. The IMF praised Pakistan's policy reforms for contributing to economic stabilization and renewed confidence despite global uncertainties.

India has expressed concerns over the potential misuse of IMF funds by Pakistan, citing the country's poor track record with previous IMF programs and the possibility of funds being diverted to support cross-border terrorism. India abstained from voting on the IMF's decision, as the IMF's voting system does not permit a formal "no" vote. Indian officials highlighted that Pakistan has been a prolonged borrower from the IMF, with disbursements in 28 of the past 35 years, yet without achieving meaningful or lasting reforms.

Pakistan's Prime Minister Shehbaz Sharif welcomed the IMF's decision, describing it as a "defeat of India's high-handed tactics" and a sign of international confidence in Pakistan's economic recovery. He dismissed India's objections, asserting that attempts to derail the IMF program were unsuccessful.

The IMF's decision comes amid escalating tensions between India and Pakistan, following a recent militant attack in Indian-administered Kashmir that killed 26 Hindu tourists. India attributed the attack to Pakistan-based militant groups, prompting retaliatory airstrikes on Pakistani territory. In response, Pakistan launched its own military operation, targeting Indian military installations. The conflict has resulted in civilian and military casualties on both sides and has raised international concerns over regional stability.

India's objections to the IMF's loan approval highlight the complex interplay between economic assistance and geopolitical tensions in the region. As the situation continues to evolve, the international community remains watchful of the potential implications for regional security and economic stability.

Source: Reuters