IMF justifies $1 bn bailout to Pakistan amid India’s terror funding concerns

Speaking at a press briefing, Julie Kozack, director of the IMF’s communications department, stated, “Our Board found that Pakistan had indeed met all of the targets. It had made progress on some of the reforms, and for that reason, the Board went ahead and approved the program.”

Kozack elaborated that the first review was scheduled for the first quarter of 2025.

“And consistent with that timeline, on March 25 of 2025, the IMF staff and the Pakistani authorities reached a staff-level agreement on the first review for the EFF. That agreement, that staff-level agreement, was then presented to our Executive Board, which completed the review on May 9. As a result, Pakistan received the disbursement at that time,” she said.

India had earlier urged the IMF to reconsider the $2.1 billion bailout plan for Pakistan, arguing that the country provides a base for terrorists to launch state-backed attacks against Indian citizens.

Defence Minister Rajnath Singh recently remarked that financial assistance to Pakistan constitutes a "form of indirect funding to terror."

The IMF also touched upon the broader India-Pakistan tensions. “With respect to Pakistan and the conflict with India, I want to start here by first expressing our regrets and sympathies for the loss of life and for the human toll from the recent conflict. We do hope for a peaceful resolution of the conflict,” Kozack said.

Among the new conditions set by the IMF are the enforcement of Agricultural Income Tax laws at the provincial level, the implementation of operational tax compliance platforms, and a June 2025 deadline.

Pakistan is also required to publish a long-term financial strategy detailing the regulatory framework beyond 2027.