Why Did the IMF Approve $1 Billion for Pakistan and Launch a New $1.4 Billion Program?

The International Monetary Fund (IMF) just gave Pakistan a major financial boost — and the timing could not be more critical. On Friday, the IMF executive board approved a new $1.4 billion climate resilience program and gave the green light for the first review of Pakistan’s $7 billion loan, immediately freeing up about $1 billion in cash for the country.

This move marks a key moment in Pakistan’s effort to stabilize its fragile economy, but it also comes with sharp political tensions in the background.

What Did the IMF Say About Pakistan’s Progress?

In its official statement, the IMF praised Pakistan’s efforts so far, saying the country has made “significant progress in stabilizing the economy and rebuilding confidence” despite difficult global conditions.

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The approval of the loan review brings Pakistan’s total disbursements to $2 billion under the $7 billion program. This funding is intended to help Pakistan navigate tough inflation, currency challenges, and a high debt burden while continuing to implement reforms.

The IMF also approved a $1.4 billion climate resilience facility, but no cash from this new program has been released yet.

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Why Is There Controversy Around the IMF Loan?

While Pakistan welcomed the decision, India raised concerns during the IMF board meeting. According to reports, India asked the IMF to conduct a broader review of the funding being provided to Pakistan.

Tensions between the two nuclear-armed neighbors flared recently after a deadly attack on Hindu tourists in Indian Kashmir that left 26 dead. India has since accused Pakistan of allowing state-backed groups to operate across borders, fueling concerns about where international funds might end up.

During the IMF session, India questioned whether debt-financed programs like these could potentially be misused for cross-border terrorism. Pakistan strongly denied the claims, calling them an attempt to “sabotage” the international support package.

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Prime Minister Muhammad Shehbaz Sharif responded directly, saying:
“India’s attempts to sabotage the IMF program have failed.”

What Is the Climate Resilience Program All About?

The new $1.4 billion loan is not just financial aid — it’s tied to a broader climate agenda. Pakistan has faced a string of natural disasters, including devastating floods that left large parts of the country underwater in recent years.

The climate resilience facility is aimed at helping countries like Pakistan manage climate-related risks through investment in infrastructure, preparedness, and environmental reforms. While the funds haven’t been disbursed yet, the program’s approval signals growing international trust in Pakistan’s current direction.