IMF Approves $1.4 Billion Loan to Pakistan

By Ariba Shahid and Rodrigo Campos

(Reuters) – The International Monetary Fund executive board approved a fresh $1.4 billion loan to Pakistan under its climate resilience fund and cleared the first review of its $7 billion program, releasing approximately $1 billion in cash.

The IMF stated, “Pakistan’s policy efforts under the program have already delivered significant progress in stabilizing the economy and rebuilding confidence, amidst a challenging global environment.”

This review approval allows for $2 billion in disbursements within the $7 billion program, although no new funds from the resilience loan were made immediately available.

India’s Request and Concerns

India has requested the IMF for a broader review of its loans to Pakistan, as tensions rise between the two nuclear-armed neighboring countries. An attack in April on Hindu tourists in Indian Kashmir resulted in 26 deaths, escalating conflict to its most severe level in nearly three decades.

During the IMF board meeting, India expressed concerns that the Pakistan program presents a “possibility of misuse of debt-financing funds for state-sponsored cross-border terrorism.”

In response, Pakistan’s Prime Minister Muhammad Shehbaz Sharif remarked that “India’s attempts to sabotage the IMF program have failed.”

The staff-level agreement on both the loan and program was achieved before current hostilities escalated.