In a major financial move, the International Monetary Fund (IMF) has approved a total of $2.4 billion in fresh support for Pakistan. This decision came after a meeting of the IMF Executive Board on May 9, 2025. The money will be given under two different programmes to help Pakistan handle its economic troubles and climate-related challenges.
The first part, about $1 billion, comes from the Extended Fund Facility (EFF), which is designed to help countries fix deep economic problems. This payment was approved after the IMF completed a review of Pakistan’s reform efforts. With this latest installment, Pakistan has now received around $2.1 billion under the EFF programme so far.
In addition, the IMF has approved about $1.4 billion under its Resilience and Sustainability Facility (RSF). This programme is aimed at helping countries manage climate change risks and improve disaster response. Pakistan, which has faced serious floods and climate disasters in recent years, plans to use this funding to strengthen its systems and build resilience against future threats.
The IMF had first approved Pakistan’s 37-month EFF programme in September 2024, allowing access to a total of about $7 billion. Now, with this new approval, Pakistan gets immediate financial relief to support its struggling economy.
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India Raises Strong Objections at IMF Meeting
While the IMF welcomed Pakistan’s progress and gave the green light for new support, India raised serious concerns. According to India’s Ministry of Finance, Pakistan has a long history of borrowing but has failed to deliver lasting reforms. India pointed out that in the past 35 years, Pakistan has taken funds from the IMF during 28 of those years but still keeps returning for bailouts.
India questioned why repeated loans have not solved Pakistan’s economic problems and suggested that either the IMF’s plans are not working or Pakistan is not following through. New Delhi also raised alarm over the risk that funds provided by global agencies like the IMF could be misused. It warned that such money might end up supporting harmful activities, including state-sponsored cross-border terrorism.
India further argued that continuing to reward a country with such a track record sends a dangerous message to the world and could harm the reputation of global financial bodies. Because the IMF’s rules don’t allow countries to vote against a proposal — they can only vote “yes” or abstain — India chose to abstain from voting on the decision.
India’s concerns reportedly found sympathy with some other countries, but the IMF board proceeded with the approval, following its set procedures.
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IMF Praises Progress but Notes Risks
Despite the objections, the IMF reported that Pakistan has made progress in stabilizing its economy. It said Pakistan achieved a primary fiscal surplus — meaning it collected more money than it spent — equal to 2% of its GDP in the first half of its financial year 2025. Inflation has also dropped sharply, reaching just 0.3% in April, which is a big improvement for a country that has struggled with high prices.
Pakistan’s foreign currency reserves have also grown, rising from $9.4 billion in August 2024 to $10.3 billion by the end of April 2025. The International Monetary Fund said reserves are expected to reach $13.9 billion by the end of June.
Looking ahead, the IMF stressed that Pakistan must keep up its efforts. It recommended that the country continue strict spending controls, expand its tax collection, and reform state-owned companies. It also said Pakistan should improve its energy sector and reduce reliance on government support, giving more space for private businesses to grow.
Under the RSF programme, the new funds will be used to improve disaster response, manage water resources better, and encourage banks and companies to report climate-related risks. The funds will also help Pakistan meet its promises under global climate agreements.
The IMF praised Pakistan for its progress but warned that risks still remain. It mentioned global uncertainties, regional tensions, and domestic weaknesses as ongoing challenges for the country’s recovery. Still, for now, the International Monetary Fund’s approval brings a much-needed financial boost to Pakistan’s economy.
