IMF issues big statement on $1 billion bailout to Pakistan amid India protest, says 'our board found that...'

Amid India's objections to the International Monetary Fund bailout package to Pakistan, the IMF has said the debt-ridden country "met all the required targets" to receive the latest loan instalment. The IMF recently gave the nod to a $1 billion (over Rs 8,000 crore) bailout package to Pakistan even as India expressed reservations. The bailout came when Pakistan was retaliating to India's Operation Sindoor -- a military strike on terror infrastructure in Pakistan and Pakistan-Occupied Kashmir (PoK).

India had asked it to reconsider the bailout as Pakistan allows terrorists to use its soil for launching state-sponsored attacks against Indian citizens.

Last week, Defence Minister Rajnath Singh said that the aid to Pakistan is a "form of indirect funding to terror" and had cautioned the international agencies, including the IMF.

The global lender disbursed $2.1 billion to Pakistan in two tranches under its Extended Fund Facility (EFF) programme. The IMF and Pakistan last year signed a deal for $7 billion under the EFF.

Defending its loan, IMF's director of the communications department, Julie Kozack, said on Thursday, "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 programme."

Kozack also made a short statement with regards to the conflict between India and Pakistan and hoped for a peaceful resolution between the two countries. "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," she said.

She said the IMF Executive Board had approved Pakistan's EFF program in September of 2024. And the first review at that time was planned for the first quarter of 2025. “Consistent with that timeline, on March 25th 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, and our Executive Board completed the review on May 9th. As a result of the completion of that review, Pakistan received the disbursement at that time.”

She said it was part of a standard procedure under programmes that the IMF Executive Board conducts periodic reviews of lending programs to assess their progress. “And they particularly look at whether the program is on track, whether the conditions under the program have been met, and whether any policy changes are needed to bring the program back on track. And in the case of Pakistan, 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,” she said.

Kozack said that there was a sufficient consensus at the Board to allow the IMF to move forward or for the Board to decide to move forward and complete Pakistan's review.

She, however, added that any deviation from the established programme conditions would impact future reviews for Pakistan.

(Except for the headline, this story has not been edited by DNA staff and is published from IANS)