The International Monetary Fund (IMF) has approved the first review of its $7 billion loan program with Pakistan, unlocking a $1 billion cash tranche for the cash-strapped country, the Pakistani government announced on Friday.
In a statement from the Prime Minister’s Office, Shehbaz Sharif expressed gratitude and optimism over the IMF’s decision, calling it a critical step toward financial stability. However, the IMF did not issue an immediate comment in response to the request.
The IMF board was scheduled to discuss both the review of the $7 billion program and a new sustainability loan for $1.3 billion over more than two years.
The announced approval comes after India asked the IMF to review its loans to Pakistan, following an April attack on tourists in Pahalgam in Jammu & Kashmir that killed 26 and triggered the worst fighting between the nuclear-armed neighbors in nearly three decades.
India has flagged the Pakistan chapter of the IMF Report on Evaluation of Prolonged Use of IMF Resources. The report noted that “there was a widespread perception that political considerations have an important role to play in the IMF lending to Pakistan. As a result of repeated bailouts, Pakistan’s debt burden is very high, which paradoxically makes it a too-big-to-fail debtor for the IMF.”
