IMF
NEW DELHI/KARACHI: Amid escalating tensions between South Asian rivals India and Pakistan, New Delhi has approached the International Monetary Fund (IMF), requesting a review of the loans being provided to Islamabad, a senior Indian government source told Reuters on Friday.
This move comes on the heels of a deadly attack in Indian Illegally Occupied Jammu and Kashmir (IIOJK) last week, which claimed the lives of 26 tourists and has further strained already fragile bilateral relations.
Both nations have responded with a slew of retaliatory diplomatic and economic actions. India, holding Pakistan responsible for the attack despite Islamabad’s strong denial and call for an impartial investigation, suspended the Indus Waters Treaty — a key river water-sharing agreement — and closed its airspace to Pakistani airlines. In response, Pakistan expelled Indian diplomats and military advisers and enacted similar airspace restrictions.
Pakistan, facing mounting economic challenges, is currently under a $7 billion IMF bailout programme, which has played a vital role in preventing the country from defaulting. In addition to that, the IMF approved a new $1.3 billion climate resilience loan for Pakistan in March this year.
These financial inflows are critical for the country’s $350 billion economy, especially amid ongoing recovery efforts following political and economic instability.
India has now raised concerns about the IMF’s continued financial support to Pakistan. While the Indian source did not disclose specific reasons or demands for the review, the timing of this request aligns with New Delhi’s broader campaign to pressure Islamabad following the IIOJK attack.
Neither the IMF nor India’s Ministry of Finance has officially commented on the matter. However, Khurram Schehzad, adviser to Pakistan’s finance minister, defended the IMF programme, stating that Pakistan’s performance under the bailout is “well on track.”
He emphasized that the latest IMF review concluded positively and that recent engagements with international financial institutions — particularly during the IMF and World Bank Spring Meetings in Washington — were highly constructive.
“We had over 70 meetings, and the interest in investing in Pakistan has been very high as our economy begins to turn around,” Schehzad told Reuters.
The rising hostility between the two nuclear-armed states has captured global attention, with the international community urging both sides to exercise restraint and avoid further escalation that could destabilize the region.
