The IMF did give money to Pakistan, but with a stern warning that if it moved even slightly, the game would be over!

Pakistan's economic condition is in crisis. IMF approved a 1 billion dollar installment despite India's opposition. But it has also added such warnings and conditions that it will not be able to fulfill its evil intentions. Here..

Highlights

• IMF approves $1 billion tranche for Pakistan.
• IMF issued a stern warning against misuse of funds.
• India expressed concern over misuse of IMF funds and terrorism.

Pakistan's economic situation has long been in crisis. The burden of foreign debt, weak foreign exchange reserves and frequent economic instability have made it a frequent resort of the International Monetary Fund (IMF). In May 2025, the IMF approved another tranche of $1 billion for Pakistan, which was part of the $7 billion Extended Fund Facility. Also, additional funding was also approved under the Resilience and Sustainability Facility (RSF) of $1.4 billion. But this time, the IMF imposed strict conditions, which made Pakistan's economic policies and its strained relations with India a topic of discussion on the global stage.

The IMF made it clear that this financial aid given to Pakistan cannot be used to support the government budget. All funds must be used exclusively to strengthen the reserves of the State Bank of Pakistan (SBP) and deal with the balance of payment (BoP) crisis. The IMF warned that any deviation from these conditions could put Pakistan's bailout program at risk. These conditions were important because Pakistan's economy was in deep crisis. Its external debt had exceeded $130 billion in 2024, a large part of which was with China. Foreign exchange reserves were only around $15 billion, which could barely cover even three months of imports.

India's objection and diplomatic strategy

India took a tough stand against this bailout. In the IMF board meeting in May 2025, India abstained from voting and raised serious questions on Pakistan's economic assistance. India raised two main concerns. First, Pakistan's poor record of IMF programs, and second, the possibility of misuse of these funds for terrorism. India said that in the last 35 years since 1989, Pakistan took funds from the IMF 28 times, but it never fully implemented reforms. India also alleged that these funds could be used directly or indirectly to promote cross-border terrorism.

 

 

India specifically cited the terror attack in Pahalgam, Kashmir, on 22 April 2025, which killed 26 tourists. The attack brought India-Pakistan tensions to a peak. India carried out precision strikes on nine terror camps in Pakistan and Pakistan-occupied Kashmir (PoK) under Operation Sindoor, killing 70 terrorists from organisations such as Lashkar-e-Taiba and Jaish-e-Mohammed. India claimed that Pakistan's army and intelligence agency ISI were supporting terrorism, and IMF funds could be misused for such activities.

 

Financial Action Task Force and India's strategy

 

India did not limit its concerns to the IMF. It also started lobbying strongly to put Pakistan back on the grey list on the platform of the Financial Action Task Force (FATF). The FATF is an international organization that works to prevent money laundering and terrorism financing. Pakistan was removed from the FATF grey list in 2022, after which it became easier for it to get funds from international financial institutions. But India argued that Pakistan fulfilled the conditions of FATF only on paper, and failed to stop the financing of terrorism on the ground.

India claimed with documents that a large part of the funds given to Pakistan for welfare schemes in the last 28 years was diverted to arms purchases and military activities. India shared this evidence with the IMF and FATF and discussed the issue with European countries, the US and other allied countries. India believed that if Pakistan is again put on the FATF grey list, it will become difficult for it to get funds from institutions like the IMF and the World Bank, which can curb its terrorist activities.