Pakistan receives $1.023 billion installment from IMF as part of extended fund facility

Pakistan has received $1.023 billion from the IMF under its Extended Fund Facility, boosting foreign exchange reserves. India abstained from voting, raising concerns over Pakistan's history of non-compliance and possible misuse of funds.

Pakistan has received a $1.023 billion installment from the IMF's Extended Fund Facility (EFF), which will be added to its foreign exchange reserves. This marks the second disbursement of special drawing rights amounting to 760 million (approximately $1.023 billion). The State Bank of Pakistan announced the funds will be incorporated into the country's foreign exchange reserves for the week ending May 16.

India had previously abstained from voting at the IMF's Executive Board meeting, citing concerns over Pakistan's history of non-compliance with IMF conditions. India expressed reservations about the potential misuse of these funds for cross-border terrorism. India also raised concerns regarding Pakistan's long-standing borrowing relationship with the IMF, highlighting its poor track record with program compliance. Pakistan's mounting debt has led to the perception that it has become a "too big to fail" debtor for the IMF.

During the review of Pakistan's EFF ($1 billion) and the assessment of a new Resilience and Sustainability Facility (RSF) program ($1.3 billion), India voiced doubts about the effectiveness of IMF support, pointing to Pakistan's track record. Additionally, India expressed concerns over the potential use of debt financing to fund cross-border terrorism through state mechanisms.

India also emphasised the risk posed by the Pakistani military's significant involvement in economic matters, which undermines long-term policy execution and reforms. Despite the civilian government holding office, the military continues to maintain significant control over both political and economic aspects of the country.

India pointed out that a 2021 UN assessment identified military-linked businesses as Pakistan's largest conglomerate, with the situation becoming more pronounced as the army assumes a key role in the Special Investment Facilitation Council.