Billions In The Bank, Missiles In The Sky: How IMF Bailout Changed Pakistan's War Posturing

News18

10-05-2025

Last Updated:
A senior IAS officer said whenever Pakistan secures international funding, particularly from Western-backed institutions like IMF, it translates aid into geopolitical defiance
Hours after the International Monetary Fund (IMF) approved the release of $1.1 billion to Pakistan under a Stand-By Arrangement (SBA) and request for another arrangement under the Resilience and Sustainability Facility (RSF), with access of about US$1.4 billion (SDR 1 billion), missiles and drone lit up the sky violating India's airspace in the wee hours. The ink on the IMF approval wasn't even dry when Islamabad flexed its muscle and dramatically changed the posturing.
'This timing is no coincidence. It has always been a part of a well-worn playbook. When Pakistan secures international funding, particularly from Western-backed institutions like the IMF, any regime in Pakistan often translates that financial relief into geopolitical defiance. Economic crisis may bring Islamabad to the negotiating table for some time, but cash in hand quickly revives the military's confidence—and its appetite for further and escalated confrontation," said a senior IAS officer serving in a related ministry.
'Our senior diplomats, including ambassadors and high commissioners in the US and UK, in their public statements and through interviews to international media channels, showed proof of Pakistan's complicity and support to terrorist organisations. They have also shown glaring evidence, including photos of Pakistan Army officials, in uniform, standing behind a globally recognised terrorist," added the official.
As Pakistan shot drones and missiles towards India, Jammu and Kashmir Chief Minister Omar Abdullah, in a sharp reaction, said: 'I am not sure how the 'International Community' thinks the current tension in the subcontinent will be de-escalated when the IMF essentially reimburses Pakistan for all the ordnance it is using to devastate Poonch, Rajouri, Uri, Tangdhar and so many other places."
Proxy Power Or Fiscal Footing?
'The current fund insisted on tax reforms, slashing subsidies, and raising energy prices. Pakistan complied—on paper," a source in the Union government said.
But while civilian institutions struggle to meet IMF targets, the military remains untouched. Defence spending is likely to go up by almost 18 per cent, as reported by the Pakistan government's budget approval documents, while health, education, and social welfare lag behind. The signal has been clear. Geo-political and strategic dominance took priority over structural reform.
India's Concern: Non-State Levellers
Meanwhile, India has already raised concerns at several global forums and even during the board meeting that IMF funds may inadvertently bankroll destabilising activities. This is, however, not unfounded anxiety.
'From cross-border ceasefire violations to supporting proxy actors, Pakistan's behaviour has often sharpened in periods following financial bailouts," said the source who has served on the Pakistan desk for years and analysed the country's trajectory of receiving 25 bailout packages from the global forums.
Pakistani Prime Minister Shehbaz Sharif, immediately after the package was announced, claimed that 'hostile efforts to derail the IMF program have failed".
But what has actually succeeded is a familiar cycle: economic collapse, global sympathy, funding, and then regional provocation. This raises uncomfortable questions even for the IMF and its backers. Can financial aid be given without enabling geopolitical brinkmanship or at least certain riders? Should there be stricter oversight on how bailout money affects defence and foreign policy?
Until such conditions are enforced, the world may continue to watch this dangerous paradox unfold—where missiles follow money, and bailouts buy not reform, but renewed defiance.
First Published:
May 10, 2025, 10:33 IST