Extensive damage to its military assets might have made Pakistan call for a ceasefire with India, but a $1-billion loan from the IMF might have helped in the de-escalation process. The loan might have come with a clause, asking Pakistan to seek an end to the fighting that had been going on for the last three days.
How did India and Pakistan, who seemed hurtling towards an all-out war, reach a ceasefire agreement so fast? There is no doubt that Pakistan sued for peace, after three days of pounding. But was there another factor — a one-billion-dollar loan that was Pakistan’s lifeline?
The $1-billion loan approved by the International Monetary Fund (IMF) to Pakistan might have come with a clause — declare an immediate ceasefire with India.
Though the ceasefire was worked out bilaterally between India and Pakistan, the US exerted pressure on Islamabad for immediate de-escalation by linking the $1-billion IMF loan to immediate acceptance of the ceasefire by it, sources told India Today TV.
India protested the loan, and the IMF came in for a lot of heat for approving the loan at a time when Pakistan was hitting Indian civilian and military sites for India’s strikes on terror camps. Pakistan’s attacks against India were perceived to be suicidal at a time when the IMF board was to review the conditions of its financial facilities.
Any IMF loan cannot be disbursed without approval from Washington DC. It is the White House that is the ultimate signatory.
US President Donald Trump claimed he negotiated the deal through long hours of the night. Both US Vice President JD Vance and US Secretary of State Marco Rubio shared his statements.
Rubio had earlier spoken to leaders from both India and Pakistan. He first dialled India’s Foreign Minister S Jaishankar and Pakistan PM Shehbaz Sharif. He spoke to Pakistan Army chief General Asim Munir too.
India said the ceasefire was worked out bilaterally with Pakistan after its Director General of Military Operations (DGMO) called to discuss a pause for the firing.
However, the US did play a key role in the de-escalation between the two countries by placing direct pressure on Pakistan, linking the $1-billion IMF loan to immediate acceptance of the ceasefire, according to sources.
WHY IMF LOAN WAS CRUCIAL FOR PAKISTAN’S SURVIVAL
Pakistan is surviving on doles and loans, and faces review at a crucial meeting of the International Monetary Fund (IMF) on May 9 on its $7-billion bailout programme.
In Friday’s meeting, the IMF board reviewed Pakistan’s financing facilities to decide on the funding.
Pakistan’s loans stood at $6.2 billion as of March 31, 2025, according to the IMF website.
The World Bank, also provided over $48 billion in assistance.
In all, Pakistan’s external foreign debt stood at a staggering $130 billion in 2024.
Pakistan has been teetering on the brink of bankruptcy, and surviving on handouts from these multilateral agencies and countries like China, Saudi Arabia and Qatar.
Due to chronic trade deficit, low tax earnings and high public debt, Pakistan’s economy has been in a crisis zone for several years now.
