The Executive Board of the International Monetary Fund (IMF) has approved two financing decisions for Pakistan, disbursing approximately $2.4 billion under its economic reform and climate resilience programmes.
Following its Executive Board meeting on May 9, the IMF said it had completed the first review of Pakistan’s economic reform program supported by the Extended Fund Facility (EFF) arrangement. This enables an immediate disbursement of around $1 billion, taking total disbursements under the arrangement to about $2.1 billion.
In addition, the IMF Executive Board approved Pakistan’s request for an arrangement under the Resilience and Sustainability Facility (RSF), providing access of about $1.4 billion. The RSF is intended to help the country address vulnerabilities related to climate change and natural disasters.
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The fund had earlier approved Pakistan’s 37-month EFF on September 25, 2024 for the amount of around US$7 billion. This review had allowed Pakistan to immediately access about $1 billion at the time.
With the latest $1 billion extended under EFF, the IMF has disbursed nearly $2.1 billion in loans to Pakistan.
The Executive Board is responsible for conducting the day-to-day business of the IMF. It is composed of 25 Directors, who are elected by member countries or by groups of countries, and the Managing Director, who serves as its Chairman. The voting is based on economic size, and as the largest financial contributor to the IMF, the U.S. receives the largest share of voting power amongst all participating countries at 16.49 percent of the total fund. India, Bangladesh, Bhutan and Sri Lanka collectively get a 3.05 percent vote share.
Noting its strong dissent to IMF’s bailout package for Pakistan, India chose to abstain from voting in the meeting, as the IMF board has no provision to vote against or vote ‘no’ for any loan or proposal. Its Directors can either vote in favour of a proposal, or abstain from voting.
During the IMF meeting, India raised concerns over the efficacy of IMF programs in case of Pakistan given its poor track record, and also on the possibility of misuse of debt financing funds for state sponsored cross border terrorism, as per the statement released by the Ministry of Finance after the May 9 meeting.
“Pakistan has been a prolonged borrower from the IMF, with a very poor track record of implementation and of adherence to the IMF’s program conditions. In the 35 years since 1989, Pakistan has had disbursements from the IMF in 28 years. In the last 5 years since 2019, there have been 4 IMF programs. Had the previous programs succeeded in putting in place a sound macro-economic policy environment, Pakistan would not have approached the Fund for yet another bail-out program. India pointed out that such a track record calls into question either the effectiveness of the IMF program designs in case of Pakistan or their monitoring or their implementation by Pakistan,” India’s Ministry of Finance said in a statement.
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India pointed out that rewarding continued sponsorship of cross-border terrorism sends a dangerous message to the global community, exposes funding agencies and donors to reputational risks, and makes a mockery of global values.
“While the concern that fungible inflows from international financial institutions, like IMF, could be misused for military and state sponsored cross border terrorist purposes resonated with several member countries, the IMF response is circumscribed by procedural and technical formalities. This is a serious gap highlighting the urgent need to ensure that moral values are given appropriate consideration in the procedures followed by global financial institutions,” India’s Ministry of Finance said.
According to the IMF, Pakistan has demonstrated strong implementation of the EFF-supported reforms. The country’s economic stabilization, IMF stated, was evident through a primary fiscal surplus of 2.0% of GDP in the first half of FY2025, historically low inflation at 0.3% in April, and improved external buffers. Gross foreign exchange reserves rose from $9.4 billion in August 2024 to $10.3 billion by the end of April 2025, with projections reaching $13.9 billion by June’s end.
Policy priorities under the EFF moving forward include continued fiscal discipline, expansion of the tax base, restructuring of state-owned enterprises (SOEs), and reforms to enhance public services and energy sector sustainability. The IMF also highlighted the importance of reducing reliance on the public sector to create more space for private credit and investment.
The RSF will focus on climate resilience through improved disaster response coordination, more efficient use of water resources, better climate-related risk disclosures by financial institutions, and support for Pakistan’s international climate mitigation commitments, the IMF said in its statement.
Nigel Clarke, IMF Deputy Managing Director and Chair, said, ““Pakistan has made important progress in restoring macroeconomic stability despite a challenging environment. Since the approval of the Extended Fund Facility, the economy continues to recover, with inflation sharply lower and external buffers notably stronger. Risks to the outlook remain elevated, however, particularly from global economic policy uncertainty, rising geopolitical tensions, and persistent domestic vulnerabilities. Against this backdrop, the authorities need to maintain sound macroeconomic policies and accelerate reforms to safeguard the macroeconomic gains and underpin stronger and sustainable, private sector-led medium-term growth.”
The IMF’s Resilience and Sustainability Facility (RSF) provides affordable longer-term financing to support low-income and vulnerable middle-income countries undertaking macro-critical reforms to reduce risks to prospective balance of payments (BoP) stability, including those related to climate change and pandemic preparedness.
The fund’s Extended Fund Facility (EFF) provides financial assistance to countries facing serious medium-term balance of payments problems because of structural weaknesses that require time to address. To help countries implement medium-term structural reforms, the EFF offers longer program engagement and a longer repayment period.
