IMF clears $1 billion aid to Pakistan despite India’s protest over terror links

Islamabad welcomed the IMF’s decision, but it triggered diplomatic tensions with India, which abstained from voting, citing concerns that the funds could potentially support state-sponsored terrorism and destabilizing activities across the region

The International Monetary Fund (IMF) has approved the immediate release of a $1 billion loan tranche to Pakistan, offering temporary relief to the country’s struggling economy. The decision brings total disbursements under the IMF’s Extended Fund Facility (EFF) for Pakistan to approximately $2.1 billion.

The approval was granted following a board meeting on Friday (May 9), where members assessed Pakistan’s economic reforms and fiscal commitments. The latest tranche includes support under the newly introduced Resilience and Sustainability Facility (RSF), aimed at promoting long-term economic stability and climate resilience in developing economies.

While Islamabad welcomed the IMF’s decision, the move has sparked diplomatic friction with India, which abstained from the board vote. India has consistently raised concerns that such funds may be diverted to support state-sponsored terrorism and destabilizing activities in the region.

Drone strikes deepen regional tensions

Tensions between the two nuclear-armed neighbours have been intensifying over recent weeks. Indian defence officials reported a surge in cross-border hostilities, including drone and missile incursions into Indian territory from Pakistan over three consecutive nights. Swarms of unmanned aerial vehicles were spotted over Jammu & Kashmir, Punjab, and Rajasthan, prompting retaliatory action by Indian air defence systems.

In one incident, three civilians were injured in Punjab’s Ferozepur district after a drone struck a residential area. India’s defence ministry stated that the integrated counter-drone systems, including the indigenous Akash missile platform, intercepted and neutralized most of the incoming threats.

India’s opposition to the IMF loan stems from longstanding concerns over Pakistan’s alleged support for cross-border militancy. Those concerns resurfaced after the April 22 terror attack in Pahalgam, Jammu & Kashmir, which claimed 26 lives. A militant group known as The Resistance Front, believed to be a proxy of the Pakistan-based Lashkar-e-Taiba, claimed responsibility.

Operation Sindoor hits militant bases

In response, India launched Operation Sindoor, targeting terror camps across the border. Nine suspected sites in Pakistan and Pakistan-occupied Kashmir were reportedly destroyed.

While Pakistan has denied any involvement in the Pahalgam incident and called for an international probe, Indian officials have cited mounting evidence linking Pakistani entities to a series of global terror plots, including past incidents in the UK and Russia.

The situation remains tense as global powers urge restraint, even as the region edges toward deeper conflict.