BIG trouble for Pakistan after India’s Operation Sindoor; IMF imposes 11 conditions on bailout package, warns…
Pakistan IMF Loan: In more trouble for Islamabad amidst the fallout of the recent India-Pakistan tensions, and devastation caused by India’s Operation Sindoor, the International Monetary Fund (IMF) has imposed on its bailout package for the cash-strapped country, while also warning that tensions with New Delhi could increase the risk to the fiscal, external and reform goals of the bailout plan.
IMF lays down 11 conditions for bailout installment
According to Pakistan-based The Express Tribune, the IMF has laid down eleven conditions for Islamabad to receive the next installment of the bailout package, including the approval of a new budget of 17.6 trillion Pakistani rupees, increasing the debt service surcharge on electricity bills, and lifting the ban on importing cars older than three years.
In its staff-level report released Saturday, IMF warned Pakistan that the fiscal, external and reform goals of the bailout program would face an increased risk Pakistan’s tensions with India are prolonged or worsen in the coming days.
India-Pakistan tensions could risk reform goals
The IMF noted that while India-Pakistan tensions have heightened significantly in the last two weeks, the impact on the stock market has been modest, with the market maintaining most of its recent gains and spreads, that have witnessed a marginal increase, The Express Tribune reported.
As per the IMF report, Pakistan’s defense budget for the next fiscal year is marked at Rs 2.4 trillion, 12 percent higher that what the global financial body had estimated.
Earlier this month the Shehbaz Sharif government had indicated that it could increase the military budget to Rs 2.5 trillion, an 18 percent increase, after the recent India-Pakistan clash escalated. Meanwhile, the 11 news conditions imposed by the IMF on Pakistan have taken the total number stipulations imposed on Islamabad’s bailout package to 50, according to The Express Tribune.
IMF approves Pakistan bailout loan amid India’s protest
On May 9, when the recent India-Pakistan conflict was at its peak, the IMF approved the first review of Pakistan’s economic reform programme under the Extended Fund Facility (EFF), enabling a disbursement of approximately USD 1 billion. “IMF Board approved the first review of Pakistan’s economic reform program under the EFF, enabling a disbursement of ~ USD 1 billion, reflecting strong programme implementation which has contributed to continuing economic recovery,” the financial body wrote on X.
However, India firmly opposed providing funds to a country that continues to sponsor cross-border terrorism, warning that such support carries reputational risks for global institutions and undermines international norms. “India abstained from the recent IMF vote on approving a loan to Pakistan, not due to a lack of opposition, but because IMF rules do not permit a formal ‘no’ vote,” according to a statement.
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