Ahead of granting a $1 billion bailout to Pakistan earlier this month, which India opposed tooth and nail and abstained from on the ground that Pakistan is using the funds to sponsor cross-border terrorism against it, the International Monetary Fund (IMF) imposed 11 additional conditions on Pakistan and warned it against the “perceived misuse” of the funds. IMF also told Pakistan that tensions with India could risk Pakistan’s fiscal reform goals.

“The rising tensions between India and Pakistan, if sustained or deteriorate further, could heighten enterprise risks to the fiscal, external and reform goals of the program. Reputational risks could also come from any perceived lack of evenhanded or if there was a perceived misuse of Fund disbursements,” IMF noted after the first review under the extended arrangement held on May 7 and released today.

Going forward, the IMF has imposed additional conditions on Pakistan taking the total to 50, including reforms to strengthen competition, raise productivity and competitiveness, reform state-owned enterprises, improve public service provision and energy sector viability, and build climate resilience.

“Today, the Executive Board of the International Monetary Fund (IMF) completed the first review of Pakistan’s economic reform programme supported by the EFF Arrangement. This decision allows for an immediate disbursement of around $1 billion (SDR 760 million), bringing total disbursements under the arrangement to about $2.1 billion (SDR 1.52 billion). In addition, the IMF Executive Board approved the authorities’ request for an arrangement under the Resilience and Sustainability Facility (RSF), with access of about US$1.4 billion (SDR 1 billion),” the IMF said in a release on Saturday.

IMF release, meanwhile, also exposed the dire straits of the Pakistan economy. “The current account recorded a surplus of US$0.7 billion in the first eight months of FY25, a significant improvement from the US$1.7 billion deficit in the same period of FY24,” it said. The gross reserves of the country stood at $10.3 billion at end-April, up from $9.4 billion in August 2024, and are projected to reach $13.9 billion by end June 2025 and continue to be rebuilt over the medium term, according to IMF.

It may be noted that India has raised concerns over the efficacy of IMF programmes in the case of Pakistan, given its poor track record, and also on the possibility of misuse of debt financing funds for state-sponsored cross-border terrorism.