‘Met All Targets’: IMF Defends $1 Billion Disbursement To Pakistan During Operation Sindoor

The International Monetary Fund (IMF) has defended its recent $1 billion disbursement to Pakistan under the Extended Fund Facility (EFF) program, asserting that the debt-laden country had fulfilled all required reform benchmarks.

The loan was released amid heightened cross-border tensions with India, following the Indian military’s Operation Sindoor, a targeted strike on terror hubs in Pakistan and Pakistan-Occupied Kashmir (PoK).

India had strongly objected to the IMF's financial assistance, questioning the rationale of funding a nation that it claims supports state-sponsored terrorism. Defence Minister Rajnath Singh last week remarked that “the aid to Pakistan is a form of indirect funding to terror.”

IMF’s Stand: Targets Met, Reforms Underway
Speaking at a media briefing, Julie Kozack, Director of the IMF’s Communications Department, emphasised that Pakistan had met the reform goals agreed upon in the bailout agreement.
“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,” Kozack stated.

She elaborated that on March 25, 2025, IMF staff and Pakistani authorities reached a staff-level agreement for the first review of the EFF, which was subsequently approved by the Executive Board on May 9, 2025, leading to the $1 billion (8,000 crore) disbursement.
 

Call for Peace Amid Rising Regional Tensions
Addressing the escalating India-Pakistan conflict, Kozack added: “With respect to Pakistan and the conflict with India, I want to start here by first expressing our regrets and sympathies for the loss of life and for the human toll from the recent conflict. We do hope for a peaceful resolution of the conflict.”

Read More 
UBS Ups BEL Share Price Target To Rs 450 – Buy, Sell Or Hold This Defence Stock?

IMF Conditions for Next Tranche
Even as the latest tranche was cleared, the IMF has imposed 11 new conditions on Pakistan for future disbursements. These include:
Parliamentary approval of a Rs 17.6 trillion federal budget
An increase in the electricity debt servicing surcharge
Lifting of import restrictions on used cars older than three years
Legislation to make the captive power levy ordinance permanent
Publication of a financial sector strategy post-2027
Phasing out all incentives for Special Technology Zones by 2035

The IMF reportedly warned that continued regional instability could derail Pakistan’s fiscal, external, and reform targets under the EFF.

Background: $7 Billion Deal in Progress
The IMF and Pakistan had inked a $7 billion agreement in 2024 under the EFF, of which $2.1 billion has been disbursed so far in two tranches.
As the next tranche depends on adherence to stricter benchmarks, all eyes will be on how Pakistan navigates domestic reforms amid mounting geopolitical pressure.