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The International Monetary Fund (IMF) has authorised an immediate USD 1 billion disbursement for Pakistan under the Extended Fund Facility (EFF), bringing total support under it to USD 2.1 billion. India abstained from the voting, expressing "deep concerns over the credibility and impact" of the Fund's programmes in Pakistan.
The bailout comes amid criticism from India that the money could be used for financing cross-border terrorism. Currently, tensions between India and Pakistan are running high, with the conflict showing no signs of de-escalating.
The Board also approved Pakistan's request for USD 1.4 billion through the Resilience and Sustainability Facility (RSF). This comprehensive USD 2.4 billion financial package aims to address Pakistan's balance of payment challenges while building long-term resilience against climate and pandemic risks.
India questioned the effectiveness of financial assistance, stating that Pakistan has received support in 28 of the past 35 years, including four programmes in just the last five, without meaningful or lasting reform. India highlighted the Pakistani military’s continued dominance in economic affairs, which undermines transparency, civilian oversight, and sustainable reform.
India argued that despite having a civilian government in power, the Pakistan army influences domestic politics and is deeply entrenched in the country's economy. A 2021 UN report had described military-linked businesses as the “largest conglomerate in Pakistan”, India said.
In the absence of a ‘no’ vote, India abstained from voting.
Jammu and Kashmir Chief Minister Omar Abdullah slammed the IMF for bailing out Pakistan through loans.
“I’m not sure how the ‘international community’ thinks the current tension in the subcontinent will be de-escalated when the IMF essentially reimburses Pakistan for all the ordnance it is using to devastate Poonch, Rajouri, Uri, Tangdhar, and so many other places,” he posted on X on the morning of May 10.
An IMF statement said Pakistan’s policy efforts under the EFF have already delivered significant progress in stabilising the economy and rebuilding confidence amidst a challenging global environment. "Fiscal performance has been strong, with a primary surplus of 2% of GDP achieved in the first half of FY25, keeping Pakistan on track to meet the end-FY25 target of 2.1% of GDP," it said.
Why India abstained from voting
On April 29, the Indian National Congress had demanded that India vote against the IMF loan to Pakistan, while it was being considered by its Executive Board.
The Executive Board of the IMF is responsible for conducting the organisation’s day-to-day business. It is composed of 25 directors, who are elected by member countries or groups of countries, and the Managing Director, who serves as its Chairman. IMF voting power reflects the economic size of each member. For instance, countries like the United States hold a disproportionately high voting share (16.49%). The IMF typically makes decisions by consensus.
If a vote is required, the IMF system does not allow a formal "no" vote. Directors can either vote in favour or abstain. There is no provision to vote against a loan or proposal. The abstention represents a significant diplomatic position that stops short of outright opposition while still registering India's reservations about the aid package.