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Putting fears of a raging war to rest – as both India and Pakistan have announced a full and immediate ceasefire following Operation Sindoor in the aftermath of the Pahalgam attack by Pakistan, here’s in brief what the latest IMF's $2.4 billion package mean for Pakistan

International Monetary Fund (IMF) amidst the India-Pakistan war on Friday (May 9) approved the fresh loan amounting to $1.4 billion under its climate resilience fund and simultaneously allowed the first review of its $7 billion program, disbursing about $1 billion.

The review approval brought disbursements to $2 billion under the $7 billion program. 

“This decision allows for an immediate disbursement of around $1 billion (SDR 760 million), bringing total disbursements under the arrangement to about $2.1 billion (SDR 1.52 billion). In addition, the IMF Executive Board approved the authorities’ request for an arrangement under the Resilience and Sustainability Facility (RSF), with access of about US$1.4 billion (SDR 1 billion),” read the IMF statement.

As per the IMF press release, Pakistan’s 37-month extended fund facility (EFF) was approved on September 25, 2024, and aims to build resilience and enable sustainable growth. 

Key priorities include (i) entrenching macroeconomic sustainability through consistent implementation of sound macro policies, including rebuilding international reserve buffers and broadening of the tax base; (ii) advancing reforms to strengthen competition and raise productivity and competitiveness; (iii) reforming SOEs and improving public service provision and energy sector viability; and (iv) building climate resilience.

Amid a slew of financial aid from multilateral establishments, including the IMF, debt-laden Pakistan’s economy is showing signs of slow but steady recovery with GDP growth turning positive. This is after the Pakistan economy has witnessed a period of acute crisis –including a contraction of GDP in 2022-23. 

“Pakistan’s economy has benefitted from improved macroeconomic stability through robust reform implementation in areas such as tax policy and energy sector viability,” said ADB Country Director for Pakistan Emma Fan. “Growth is projected to persist in 2025 and to increase in 2026.

At a key executive board meeting of multilateral lender International Monetary Fund (IMF) on Friday, India raised serious concerns over Pakistan's poor record and the possibility that the country could be misusing the funds for "state-sponsored cross-border terrorism".

Also Read: Explained: Pakistan's IMF lending history & why India opposes new bailout

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