New Delhi/Islamabad, May 2, 2025: As tensions rise between South Asian rivals India and Pakistan, New Delhi has formally asked the International Monetary Fund (IMF) to review its ongoing loan disbursements to Pakistan, an Indian government source told Reuters on Friday.
The request comes in the wake of a deadly attack in Indian Illegally Occupied Jammu and Kashmir (IIOJK), which killed 26 tourists last week. While India has accused Pakistan of links to the incident, Islamabad has firmly denied any involvement and called for an impartial international investigation.
In response to the incident, both nations have implemented a series of retaliatory measures. India suspended key provisions of the Indus Waters Treaty, and both countries closed their airspace to each other’s airlines, raising fears that the latest crisis between the nuclear-armed neighbors could spiral into a military confrontation.
India’s request to the IMF marks a significant development in the diplomatic standoff. While the source provided no further details, the move is widely seen as an attempt to increase financial pressure on Pakistan.
Pakistan, however, remains confident in the status of its IMF-supported economic programme. Adviser to the Finance Minister, Khurram Schehzad, told Reuters that Pakistan’s $7 billion IMF bailout program, approved last year, and the $1.3 billion climate resilience loan granted in March are both proceeding smoothly.
“The latest review has been done well and we are completely on track,” Schehzad said. “We had very productive spring meetings in Washington with global financial institutions. We conducted about 70 engagements and found strong international interest in investing and supporting Pakistan as its economy turns around.”
Pakistan credits the IMF programme with helping stabilize its $350 billion economy and avoiding a sovereign default in 2023. Any disruption to this support could have significant economic and political consequences.
Neither the IMF nor India’s Ministry of Finance have yet commented officially on the request.
The rising tensions have drawn global concern, with international actors urging both sides to de-escalate and pursue diplomatic channels to avoid further deterioration in regional stability.
