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Home » India Slams IMF’s $2.4 Billion Aid to Pakistan, Warns of Terror-Funding Risk Amid Rising Tensions

India Slams IMF’s $2.4 Billion Aid to Pakistan, Warns of Terror-Funding Risk Amid Rising Tensions

Ananya Pattnaik by Ananya Pattnaik
May 10, 2025
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The International Monetary Fund (IMF) has approved $2.4 billion in financial support for Pakistan under two programmes — the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) — sparking sharp criticism from India over concerns that the funds could be misused to fuel cross-border terrorism amid ongoing military escalations between the two nuclear-armed neighbours.


During the IMF meeting, India raised concerns about the effectiveness of IMF programmes in Pakistan, citing its poor track record and the potential misuse of debt financing for state-sponsored cross-border terrorism, according to a statement from the Ministry of Finance following the May 9 meeting.

Following the IMF Executive Board’s meeting on May 9, Pakistan will immediately receive $1 billion under the EFF and gain access to $1.4 billion through the RSF, designed to aid climate resilience and disaster response. The latest tranche takes the total IMF disbursement to Pakistan under the current EFF arrangement to $2.1 billion.

India officially abstained from voting — the only form of dissent permitted under IMF rules — and issued a strong statement post-meeting, questioning Pakistan’s credibility and the IMF’s oversight.

“Pakistan has been a prolonged borrower with a dismal track record. In the last 35 years, it has drawn IMF funds in 28 years. Four separate programmes have been approved just since 2019. If earlier interventions had succeeded, Pakistan wouldn’t need another bailout,” India’s Ministry of Finance stated.

India further argued that fungible IMF inflows may be diverted by Pakistan to finance military aggression or state-sponsored terrorism, especially amid the current India–Pakistan conflict sparked by the Pahalgam terror attack.

“Rewarding Pakistan’s continued use of cross-border terrorism sends a dangerous signal and risks the reputation of international financial institutions,” the Indian ministry warned.

The IMF, however, cited macroeconomic stabilization progress in Pakistan, including:

  • Primary fiscal surplus of 2.0% of GDP (FY2025 H1)

  • Inflation down to 0.3% in April

  • Foreign reserves increased to $10.3 billion, projected at $13.9 billion by June

Nigel Clarke, Deputy Managing Director and Chair of the IMF Board, stated:

“Pakistan has made important progress in restoring macroeconomic stability despite a challenging environment. But risks remain from geopolitical tensions, policy uncertainty, and internal vulnerabilities.”

He reiterated the need for continued fiscal reforms, tax expansion, restructuring of state-owned enterprises, and improved climate-risk management.

  • The EFF supports medium-term structural reforms and provides longer repayment terms for countries facing persistent BoP issues.

  • The RSF provides affordable, long-term financing to address climate-related vulnerabilities and pandemic preparedness, targeting low-income and climate-vulnerable nations.

India’s objections reportedly resonated with several IMF board members, but procedural constraints limited the scope for blocking the disbursement.

Tags: IMFIndia-Pakistan tensionslatest newsPakistan terror fundingWarns of Terror-Funding Risk
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