Govind Tekale
The IMF has approved $2.4 billion for Pakistan, even as India stayed silent during the vote over terrorism worries. This money comes at a good time for Pakistan, where prices are dropping and money reserves are growing.
On May 9, 2025, the IMF approved two separate funds for Pakistan. The first was $1 billion from an ongoing $7 billion loan package that started last September. The second was $1.4 billion from a new climate fund aimed at helping countries deal with natural disasters.
Pakistan’s economy is doing better than it has in years. Prices barely rose in April – just 0.3% – the lowest ever recorded. This allowed Pakistan’s central bank to cut interest rates by 1,100 basis points since last June, making loans cheaper for businesses and families.
The government is spending less than it earns for the first time in a long while. In the first half of this fiscal year, they had a 2% surplus when not counting debt payments.
Foreign money reserves have grown from $9.4 billion last August to $10.3 billion in April. If this trend continues, reserves could reach nearly $14 billion by the end of June.
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India chose not to vote on giving Pakistan this money. The decision highlights ongoing tensions between the two neighbors following an attack in Kashmir in April and various sanctions each country has placed on the other.
The $1.4 billion climate package comes from a special IMF fund created in 2022. This money will help Pakistan improve water systems, create disaster response plans, and better prepare for climate challenges. The country aims to make irrigation 20% more efficient and build a $200 million emergency fund by 2027.
Despite these improvements, Pakistan still carries heavy debt. Government debt equals about 73.6% of the entire economy. To diversify its financing sources, Pakistan is reportedly negotiating with China for additional funding.
Some economic gains are reaching ordinary Pakistanis. Poverty dropped to 21.9% in 2023/24, though many still struggle. The Benazir Income Support Programme, which gives money to struggling families, now helps 9 million households – 15% more than last year.
Pakistan has borrowed from the IMF 25 times since 1950. This time is different because it includes money specifically for climate challenges.
For everyday Pakistanis, the real test will be whether these loans and reforms lead to more jobs, stable prices, and better protection from floods and other disasters that have hit the country hard in recent years.
