India May Be Barking Up The Wrong Tree As It Takes On Pakistan In IMF

On May 9, the International Monetary Fund (IMF) approved the disbursement of another $1 billion to Pakistan under its latest Extended Fund Facility (EFF), reinstating Pakistan’s dependence on international bailouts. As a country with a high dependence on imported oil, whenever oil prices hike or international borrowing declines, Islamabad’s reserves take a further hit. Since 1958, whenever this occurs, Pakistan has approached the International Monetary Fund (IMF) for a bailout approximately every three years, seeking to save its economy under the condition of improving macroeconomic indicators. While the role of the IMF has been minimal in reforming Pakistan’s governance, its fund facilities have stabilised the economy from falling into the pit grave. However, the key question remains: have IMF bailouts inadvertently enabled an environment to facilitate terror financing? If so, should India try to block IMF funds to Pakistan? 

India Needs An Accountable Pakistan

Contrary to popular imagination, the IMF’s role is distinct, and its programmes impose strict conditions that compel Islamabad to demonstrate some accountability in governance and economic management. And India needs an accountable Pakistan.Corrective policies adopted under the IMF programmes have stabilised some economic conditions to a limited extent. Pakistan, with seven decades of cyclical debt accumulation with the IMF, was able to bring a modest recovery under these programmes. The economic growth rebounded to 2.4% from 0.6% in 2023, and inflation was brought to single digits from double-digit levels in 2025.  In the latest 37-month Extended Fund Facility (EFF) arrangement, which commenced in 2024, the key conditionalities of the IMF programme include implementing sound macroeconomic policies, such as rebuilding international reserve buffers, broadening the tax base, enhancing productivity and competitiveness, and reforming State-Owned Enterprises (SOEs). 

While Pakistan may continue to rely on the IMF to develop reform plans to enhance its economy, the IMF’s role remains minimal until the authorities undertake domestic reforms to improve their governance. However, it forces Pakistan to be accountable to the IMF and the world regarding the money it receives. While Pakistan may continue to rely on the IMF to develop reform plans to enhance its economy, the IMF’s role remains minimal until the authorities undertake domestic reforms to improve their governance. However, it forces Pakistan to be accountable to the IMF and the world regarding the money it receives.