IMF approves $1 billion disbursement to Pakistan, says PM Shehbaz Sharif's office

The decision comes after New Delhi had asked the IMF to review its loans to Pakistan citing its continued support for cross border terrorism against India

The Pakistan government on Friday said the International Monetary Fund's (IMF) executive board approved the first review of its $7 billion program, freeing $1 billion in cash for the country locked in a conflict with India over the April 22 Pahalgam terror attack.

Pakistan's Prime Minister Office claimed that the country's economic situation has "improved" and "moving towards development".(AFP file)

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

The latest approval brings the total disbursements to $2 billion within the $7 billion program. The latest sanction comes after New Delhi had asked the IMF to review its loans to Pakistan, citing its continued support for cross-border terrorism against India.

Reuters reported that the staff-level agreement for the bailout program was reached between the IMF and the Pakistani government before tensions escalated between New Delhi and Islamabad. The global body did not respond to the agency's request for a comment after the approval.

India on bailout for Pakistan

Before the approval, India on Friday opposed the IMF proposal to extend fresh loans of USD 2.3 billion to Pakistan, saying they could be misused for financing state-sponsored cross-border terrorism.

The Union government registered its protest at the board of IMF, which met on Friday to review the Extended Fund Facility (EFF) lending programme (USD 1 billion) and also considered a fresh Resilience and Sustainability Facility (RSF) lending programme (USD 1.3 billion) for Pakistan.

A statement by the Centre said that, “India pointed out that rewarding continued sponsorship of cross-border terrorism sends a dangerous message to the global community, exposes funding agencies and donors to reputational risks, and makes a mockery of global values. While the concern that fungible inflows from international financial institutions, like IMF, could be misused for military and state sponsored cross border terrorist purposes.”