Why is the International Monetary Fund, or the IMF, still funding a country that breeds terrorists?

It’s a question that India has been asking for years. And yet, the answer remains unclear. Despite repeated warnings, overwhelming evidence, and the blood of thousands of innocents being spilled on Indian soil—the IMF continues to hand out billion-dollar cheques to Pakistan, a country which openly sponsors terrorism.

In the latest, Pakistan received two significant disbursements from IMF under its Extended Fund Facility (EFF) program.

First Tranche: On May 9, 2025, the IMF allowed for an immediate disbursement of approximately $1 billion to Pakistan, following a first review of Pakistan’s economic reform program

Second Tranche: Subsequently, on May 13, 2025, Pakistan received the second tranche amounting to $1.023 billion from the IMF under the same program.

These disbursements are part of a broader $7 billion loan package approved by the IMF in September 2024, aimed at stabilizing Pakistan’s economy and supporting its reform agenda.

The disturbing trend clearly highlights how an institution, designed to stabilize the world, knowingly or unknowingly, is now destabilizing it by propping up a regime that exports terror as state policy.

In order to understand the depth of this crisis, let’s break down how the IMF works, who controls it, why Pakistan keeps getting bailed out, and how the money ends up fuelling exactly what it was meant to prevent.

What is the IMF? 

The International Monetary Fund was established in 1944 at the Bretton Woods Conference with lofty ambitions:

• To promote global monetary cooperation
• Facilitate international trade
• Ensure financial stability
• Help reduce poverty
• Provide financial lifelines to countries in deep economic trouble.

As of 2024, it boasts 191 member countries, each of which contributes funds based on a quota system. In return, these countries get voting rights and access to IMF resources.

When a country faces a balance-of-payments crisis — meaning it cannot pay for essential imports or service its debt — it can turn to the IMF. The IMF offers different types of lending mechanisms tailored to specific needs:

• Stand-By Arrangement (SBA): Handles short-term financial crunches
• Extended Fund Facility (EFF): It is for countries with longer-term structural problems
• Rapid Financing Instrument (RFI): Provides emergency support, like during the COVID-19 pandemic
• Poverty Reduction and Growth Trust (PRGT): It is targeted at low-income nations

But IMF loans aren’t freebies. Countries must agree to economic reforms to qualify, such as fiscal austerity, cutting subsidies, devaluing currency, and even privatizing public assets. These are called “conditionalities” imposed on the loan-taking nations.

Who Really Runs the IMF? 

While the IMF is a collective of 191 countries, in reality, it’s run by a handful of powerful shareholders. The United States holds the largest share at 16.5%, giving it de facto veto power over any major decision, which requires an 85% majority.

Japan at 6.15%, China – 6.09%, Germany – 5.31%, France & UK – 4.03% each, and India follow behind with 2.75%, as the 8th largest contributor. Yet, when it comes to decisions that affect India’s national security, its voice is too often ignored.

This was clearly seen recently when India wanted to stop the latest tranche to the IMF not being passed, citing concerns over Pakistan’s poor track record with IMF programs and the potential misuse of funds for state-sponsored cross-border terrorism.

Why Does Pakistan Keep Getting IMF Loans? 

IMF’s latest tranche to Pakistan isn’t just the first time when the monetary organisation is funding the cash-strapped nation. Pakistan has turned borrowing into a habit. In the last 35 years, it has taken 28 loans from the IMF.

Pakistan’s reasoning? A familiar tale. Low foreign reserves. Ballooning import bills. High inflation. Economic mismanagement. And of course, the after-effects of the devastating COVID-19 pandemic.

And what did the IMF say while justifying the loan? On one hand, it stated that it is satisfied with Pakistan’s “reforms,” which include tax tweaks, budget overhauls, and energy price hikes. While on the other hand, it acknowledged that Pakistan has deep structural weaknesses. Its economy has stagnated. Its GDP in 2023 was $338 billion, lower than in 2017. Inflation hit 29.1% in 2023, and 23.4% in 2024. Do you see the irony here!

Does Pakistan Use IMF Loans to Fund Terrorism? 

On paper, IMF funds are tightly monitored, with a strict policy that the funds must not be used for military upgradation. Yet, the money Pakistan saves by slashing subsidies or restructuring debt can easily be funneled into its military and intelligence operations by the Inter-Service Intelligence or the ISI. And that’s where the danger lies.

The Pakistan military and ISI continue to provide a safe haven to globally designated terrorist outfits like Lashkar-e-Taiba and Jaish-e-Mohammed. These are the same groups responsible for the 26/11 Mumbai terror attack, Pulwama attack, and many other countless cross-border infiltrations into Kashmir.

Shockingly, recent developments have exposed just how blatant this misuse has become. After India’s Operation Sindoor, wherein it targeted terror camps in Pakistan and Pakistan-occupied-Kashmir, Islamabad announced compensation of 1 crore Pakistani rupee for each of the deceased.

Among the beneficiaries? Masood Azhar, the UN-designated terrorist and chief of JeM. His 14 family members were eliminated in India’s airstrikes on May 7, 2025. With PKR 1 crore(rupees) per head, Azhar stands to receive PKR 14 crore(rupees). This compensation was announced just days after Pakistan received its IMF tranche. If that isn’t indirect funding of terrorism, what is?

India has consistently raised concerns about IMF bailouts to Pakistan, warning that these funds enable a regime that supports terrorism. With a permanent seat on the IMF Executive Board, but with no veto power, India’s objections are drowned. The IMF claims its decisions are based purely on economic criteria, not politics. But when those decisions embolden a state that wages proxy war on its neighbours, it stops being just economics.

Could the US, Its Major Contributor, Have Blocked the Loan? 

Absolutely. With its veto power, the United States could have stopped the IMF from approving another bailout to Pakistan. But Washington chose not to. The US has a long history of propping up Pakistan as a strategic ally in South Asia while silently funding terrorism.

For India, this is not just frustrating—it’s dangerous. Every IMF loan to Pakistan frees up funds that can be diverted elsewhere. And unfortunately, we know exactly where some of that money ends up—funding terrorism!

As long as terror-funding states are treated as financial victims, and geopolitical convenience overrules morality, the cycle will continue.

So we return to the original question: Why does the IMF, led by the world’s most powerful democracy, continue to financially support a state that glorifies terrorism? How long will the IMF continue to bail out a nation that sends bullets across the border instead of peace?

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