Pakistan's reliance on the IMF for financial support is underscored by its external debt of $131 billion, highlighting the ongoing economic struggles it faces.

On May 9, 2025, the International Monetary Fund (IMF) approved approximately $1 billion in disbursements to Pakistan under the Extended Fund Facility (EFF), along with an additional $1.4 billion through the Resilience and Sustainability Facility (RSF), totaling a financial package of $2.4 billion.

This funding is part of Pakistan's ongoing IMF program, which was established in July 2024 as a three-year, $7 billion aid package aimed at achieving macroeconomic stability and promoting resilient growth.

Despite a recent reduction in inflation to 0.30% and an increase in foreign exchange reserves to $15.58 billion, Pakistan's economic fundamentals remain weak, burdened by fiscal deficits and a reliance on foreign aid.

Amid escalating border tensions and military strikes, Pakistan is seeking a $1.3 billion bailout package to stabilize its economy.

India abstained from voting on the IMF's support for Pakistan, citing concerns about Pakistan's history with IMF programs and the potential misuse of funds for state-sponsored terrorism.

India's Foreign Secretary Vikram Misri urged the IMF Board to carefully consider the implications of further financial support to Pakistan, emphasizing that continued backing for terrorism undermines global values.

India highlighted that Pakistan has received IMF disbursements in 28 of the past 35 years, questioning the effectiveness of such aid given the lack of significant reforms.

In response to India's opposition, Pakistan's Prime Minister Shehbaz Sharif welcomed the IMF's approval, claiming it reflects an improvement in the country's economic situation.

India has implemented economic measures against Pakistan, including a 200% duty on imports and the suspension of trade, which have further strained relations.

The geopolitical landscape, particularly US-China relations, has allowed India to isolate Pakistan economically and diplomatically, altering the balance of power in the region.

Concerns have been raised regarding the significant influence of the military in Pakistan's economic affairs, which undermines transparency and sustainable reform efforts.