IMF Allocates $1 Billion for Pakistan, Launches New $1.4 Billion Initiative

On May 9, the International Monetary Fund (IMF) announced the approval of a new $1.4 billion loan for Pakistan as part of its climate resilience fund, alongside the greenlighting of the initial review of its $7 billion program, which has resulted in the release of approximately $1 billion in funds.

The IMF acknowledged the progress made by Pakistan in stabilizing its economy and restoring confidence amid a challenging global landscape, noting that the country's policy measures have yielded significant advancements under the current program.

This approval marks a total disbursement of $2 billion out of the $7 billion program, although immediate availability of funds from the climate resilience loan has not been confirmed.

In light of rising tensions between India and Pakistan, India has requested the IMF to conduct a comprehensive review of its loans to Pakistan. This request follows a tragic incident in April where an attack on Hindu tourists in Indian-administered Kashmir resulted in the deaths of 26 individuals, escalating hostilities between the two nuclear-armed nations.

During the recent IMF board meeting, India raised concerns regarding the potential misuse of funds from the Pakistan program, suggesting that these funds could be diverted towards state-sponsored terrorism across borders. In response, Pakistan's Prime Minister Muhammad Shehbaz Sharif asserted that India's attempts to undermine the IMF program have not succeeded, emphasizing the resilience of the agreement established prior to the recent escalation of conflicts.

The IMF's measures aim to bolster Pakistan's economy, particularly in light of recent challenges, by providing necessary financial support while addressing environmental concerns through the climate resilience fund.