On the eve of a key International Monetary Fund (IMF) meeting in Washington, India has voiced strong opposition to the continuation of financial assistance to Pakistan.
Speaking at a media briefing on Thursday, Foreign Secretary Vikram Misri confirmed that India will present its concerns directly to the IMF.
“I’m sure that our executive director will put forward India’s position,” Misri said.
He further noted that countries providing consistent financial support to Pakistan should carefully consider the risks involved, particularly given Pakistan’s repeated failures in managing past IMF aid effectively.
Pakistan’s Troubled Track Record with the IMF
India’s objections are rooted in Pakistan’s long and checkered history with the IMF. Since becoming a member in 1950, Pakistan has entered into 24 IMF loan programs, making it one of the most frequent beneficiaries globally.
According to IMF data:
Many of these programs were suspended or abandoned due to failure to meet agreed conditions.
The most recent package—a $3 billion Stand-By Arrangement approved in July 2023—was aimed at stabilising Pakistan’s economy, which has been under severe strain.
Despite repeated bailouts, critics argue that Pakistan has failed to address core structural issues, including:
Poor fiscal management, which has contributed to rampant inflation, which was 17.3% in April 2025.
Persistently low foreign exchange reserves, estimated at $8 billion as of May 2025, covering just 1.5 months of imports
Military Action Deepens Regional Tensions
India’s IMF stance comes just a day after it launched "Operation Sindoor", conducting military strikes on terrorist camps in Pakistan and Pakistan-Occupied Kashmir (PoK).
The strikes followed a series of cross-border drone and missile threats reportedly originating from Pakistani territory. Indian defense forces claimed to have neutralized the threats and shot down two Pakistani drones in the Naushera sector of Jammu & Kashmir.
This marks a serious escalation in bilateral tensions, with both military and diplomatic channels now actively engaged.
Strategic Implications and Market Impact
India’s challenge at the IMF appears to be part of a broader geopolitical strategy -- applying economic pressure on Pakistan through international forums, while reinforcing its stand against terrorism.
From a market perspective, rising geopolitical tension is likely to increase volatility in Indian equity indices, and prompt a flight to safe-haven assets, including gold and government bonds.
This may lead to potential pressure on the Indian Rupee, especially if global risk sentiment deteriorates.
Markets React to Escalating Geopolitical Risks
Indian equity markets opened lower on Friday as geopolitical tensions between India and Pakistan intensified following India’s recent military actions and diplomatic positioning.
In the opening trade on Friday, the Sensex had dropped 523.24 points (0.65%) to 79,811.57, and the Nifty 50 declined 189.85 points (0.78%) to 24,083.95.
Investor sentiment remains cautious, with global risk aversion weighing on markets.
Outlook
According to financial experts, markets are expected to remain sensitive to any further geopolitical developments. In the short term, traders are advised to follow a level-based trading strategy, as the market remains largely non-directional.
Looking ahead, investors will closely monitor the outcome of the IMF board meeting and any signals regarding the terms of aid to Pakistan. Domestically, market participants are seeking clarity on how long the current standoff might last—and whether it risks escalating into broader regional instability.