India cautions IMF on Pakistan's ₹8,000 crore bailout: ‘Arms purchases surge with every loan'

India on Friday reiterated its concerns over the International Monetary Fund (IMF) releasing over ₹8,000 crore bailout package to Pakistan. New Delhi cautioned the financial agency that Pakistan's “arms purchase spikes with every loan” it gets from the global lender, Reuters reported sources as saying. India's push to IMF came as the global lender informed that its executive board granted $1 billion in assistance to Pakistan this month.

Defence Minister Rajnath Singh on May 16 had pressed the IMF to reconsider the financial assistance, saying Islamabad could use a large part of it to fund the terrorist infrastructure.

Justifying the bailout package, IMF in statement said the latest installment was released after finding out that Islamabad had indeed “met all the required targets”.

The latest bailout for Pakistan is part of a broader support package under the Extended Fund Facility program which was approved in September 2024. Pakistan has so far received approximately $2.1 billion of the $7 billion it will get from the global lender.

Julie Kozack – IMF's director of the communications department – said that Islamabad met all the targets and made progress on some of the reforms. Also Read | IMF slaps 11 new conditions on Pakistan against its billion-dollar bailout scheme

“Our Board found that Pakistan had indeed met all of the targets. It had made progress on some of the reforms, and for that reason, the Board went ahead and approved the program,” Julie Kozack said.

She said, “The first review was planned for the first quarter of 2025. And consistent with that timeline, on March 25 of 2025, the IMF staff and the Pakistani authorities reached a staff-level agreement on the first review for the EFF. That agreement, that staff-level agreement, was then presented to our Executive Board, which completed the review on May 9. As a result, Pakistan received the disbursement at that time.”

‘GREY LIST’ OF FATF

The 'grey list' of the FATF means a country or a jurisdiction is subject to increased monitoring.

Pakistan was taken off the FATF grey list in 2022, boosting its reputation among lenders - which is essential for the crisis-hit economy.

It may be recalled that on 9 May, the IMF approved the immediate disbursement of about $1 billion to Pakistan under the ongoing Extended Fund Faci­li­ty.

The Indian government had opposed the IMF's proposal to extend fresh loans to Pakistan, saying they could be misused for financing state-sponsored cross-border terrorism. India registered its protest at the board of IMF, and abstained from voting at the crucial IMF meeting.