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Reshaping Perspectives and Catalyzing Diplomatic Evolution

IMF disburses $1 Billion to Pakistan amid escalating tensions with India

India raises red flags over possible misuse of funds as deadly conflict simmers in Kashmir and beyond.

The International Monetary Fund (IMF) on Thursday approved a disbursement of $1.1 billion to Pakistan, sparking sharp reactions from New Delhi as tensions between the two nuclear-armed neighbors intensify.

The IMF move came after the completion of the first review under Pakistan’s $7 billion Extended Fund Facility (EFF) and included additional funding under the Resilience and Sustainability Facility (RSF), bringing total disbursements to roughly $2.1 billion by IMF.

India has publicly voiced concern over the disbursement, warning that Pakistan could potentially divert funds intended for economic stabilization toward military operations amid ongoing hostilities.

Indian officials have expressed concern that such disbursements, if not tightly monitored, could risk fueling instability in the region amid ongoing military tensions.

Timing Sparks Alarm in New Delhi

The IMF’s approval follows deadly violence along the Line of Control in Kashmir and beyond. In late April, militants allegedly backed by Pakistan launched an attack on a group of Indian pilgrims in Jammu and Kashmir, killing at least 12 civilians. India responded with Operation Sindoor, a large-scale airstrike targeting suspected terror camps inside Pakistan-administered territory.

As the conflict continues to spiral, Indian security officials have expressed frustration over international financial institutions extending support to Islamabad while failing to hold it accountable for destabilizing acts.

“At a time when Pakistan faces allegations of supporting terrorism, this loan approval sends the wrong signal,” said retired Lt. Gen. Satish Dua, former Indian military operations chief, as reported in the Economic Times.

IMF Maintains Economic Lens

Despite the geopolitical backdrop, the IMF reiterated its focus on economic reform, not regional politics. In a press statement, the Fund emphasized that the support aims to help Pakistan address fiscal imbalances, preserve foreign reserves, and implement climate resilience measures.

Yet critics argue the IMF has failed to enforce accountability mechanisms or demand transparency in how Pakistan allocates externally funded resources.

Pakistan Welcomes the Funding

Pakistan’s government issued a statement welcoming the IMF’s decision, framing the disbursement as part of ongoing efforts to stabilize the economy and pursue fiscal reforms. Prime Minister Shehbaz Sharif expressed satisfaction over the approval, calling it a positive step for Pakistan’s economic recovery.”

Prime Minister Muhammad Shehbaz Sharif expresses satisfaction over the approval of a $1 billion tranche by the International Monetary Fund (IMF) for Pakistan,” his office said in a statement, as reported by Reuters.

However, concerns persist among economic observers in Pakistan about the implementation capacity of the government. Past IMF programs in the country have faced criticism for limited structural reform outcomes. Analysts have urged greater transparency and monitoring to ensure funds are used effectively.

A Diplomatic Flashpoint

India abstained from the IMF vote, lodging a formal objection. Although New Delhi does not have veto power in the IMF’s executive board, its growing role as a major donor and emerging economic power gives it considerable moral leverage.

Security analysts in Delhi warned that the disbursement could further embolden Islamabad, potentially complicating efforts to de-escalate the current military standoff.

“This is not just about economics. This is about regional peace,” said Dr. Ananya Roy, a fellow at the Observer Research Foundation.

The Bigger Picture

This disbursement comes at a precarious time in South Asia. With two nations engaged in direct confrontation and the threat of escalation looming, international institutions face renewed scrutiny over the unintended consequences of their decisions.

As the global community calls for restraint, questions remain about whether financial assistance in volatile environments risks enabling — rather than resolving — the very crises they aim to prevent.

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