The International Monetary Fund (IMF) will undertake its next funding review for Pakistan in the second half of 2025, with 11 new conditions now attached to the continuation of its Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) programmes.
An official IMF statement confirmed that ongoing talks with Pakistani authorities are aimed at finalising the budget framework for the 2026 fiscal year. The Fund stressed that future financial support will hinge on economic reforms, fiscal discipline, and Pakistan’s adherence to stringent conditions.
“The next mission associated with the Extended Fund Facility and Resilience and Sustainability Facility reviews is expected in the second half of 2025,” said the IMF following a staff visit led by mission chief Nathan Porter.
Porter said the team had held “constructive discussions” with Islamabad, focusing on the FY2026 budget and broader policy reforms. The Pakistani government has pledged to maintain a primary budget surplus of 1.6% of GDP while safeguarding social spending and critical developmental outlays.
Energy sector reforms remain a key concern, with the IMF urging Pakistan to address the financial unsustainability of its power sector. The mission also emphasised the need for structural reforms to attract investment and create a level playing field for business, which remain crucial for long-term economic stability.
In India, the timing and intent behind the IMF’s recent engagement with Pakistan have drawn sharp responses. New Delhi expressed gratitude for the newly imposed conditions but reiterated its concern that the funds might be misused, particularly for military purposes.
“The IMF should ensure that its support is not diverted towards expanding Pakistan’s defence capabilities,” said a senior Indian official, referring to the nation’s military posture following India’s Operation Sindoor — a retaliatory strike on terror infrastructure across the Line of Control in April.
India has repeatedly accused Pakistan of using IMF funds to bolster its military while continuing to harbour and support terrorist organisations operating in Jammu and Kashmir. Indian authorities have formally asked the IMF to reconsider its approach, cautioning that leniency may undermine regional stability.
The 11 new conditions reportedly target Pakistan’s budget transparency, defence expenditure limits, energy reform progress, and counter-terror financing commitments. These measures are intended to increase accountability and ensure that IMF resources are used strictly for economic recovery and development.
“The problem isn’t with aid meant for development,” an Indian official clarified. “But when a bailout enables a regime to escalate tensions and divert resources to security and terror infrastructure, it’s a global concern.”
While Islamabad seeks to stabilise its faltering economy, it now faces intensified scrutiny from the global financial community, especially after the April flare-up in India-Pakistan relations.
The IMF has not publicly commented on India’s request but reiterated its focus on “macroeconomic stability, structural reforms, and resilience building” in Pakistan. The next phase of funding discussions is expected to coincide with further assessments of the country’s compliance.
