It has spent $153.25 billion for defence purchases from 2000 to 2023.
NEW DELHI: Pakistan’s latest $760 million loan from the IMF has pushed its total debt to $8.6 billion to the international body, making it the fourthlargest borrower among 102 countries and the only nation to receive IMF funds between 1 May and 15 May 2025. This loan comes amid India’s military operation, “Sindoor”.
As per official data compiled by the IMF, since 1958, Pakistan has taken approximately $28.96 billion across 25 IMF arrangements. Yet, what has not been documented enough is that alongside this dependence on IMF to keep its economy afloat, Pakistan has officially spent a staggering $231.84 billion on defence purchases from 1960 to 2023, including $153.25 billion from 2000 to 2023, raising questions about how a cash-strapped nation prioritizes its resources. This number does not include the unclassified military spendings.
In another significant comparison, Pakistan’s economy, with a GDP of $340 billion (0.3% of global GDP), accounts for nearly 6% of the IMF’s outstanding credit. The latest disbursement that happened in May is part of a $7 billion Extended Fund Facility (EFF) signed in September 2024. The disbursement took place even as India was actively targeting and destroying terrorist camps and headquarters.
Despite calls from national and international observers urging the postponement—or outright denial—of IMF aid to Islamabad until it dismantled these terror networks, the funds were released without such conditions. It is pertinent to note that the IMF has, in the past, delayed or withheld payments to countries for failing to meet specific program conditions—such as implementing economic reforms, upholding governance standards, or achieving fiscal targets.
Therefore, the request to make aid conditional on shutting down terror camps was not unprecedented or extraordinary. For instance, in 2024, Kenya experienced delays in receiving approximately $600 million due to concerns over corruption and governance, with major shareholders demanding an assessment before funds were released. Similarly, Sri Lanka faced significant delays in securing IMF financing after its 2022 debt default, with an Extended Fund Facility only approved in March 2023 following debt restructuring and reform commitments.
Zambia also encountered delays from 2020 to 2022, as the IMF withheld funds until a 2022 Extended Credit Facility was agreed upon, contingent on fiscal and debt restructuring progress. Pakistan too, under its 2019 Extended Fund Facility, saw disbursements delayed in early 2020 due to slow implementation of tax and fiscal reforms.
Earlier the IMF had come to the rescue of Pakistan through programs like a $2.25 billion Stand-By Arrangement in 2023, a $5 billion EFF (2019–2023), and a $1 billion Covid-related loan in 2020. Since its first IMF loan in 1958 ($272,463), Pakistan has regularly turned to the Fund for assistance—in 1960, 2001, 2008, 2013, 2019, and 2024—often agreeing to reforms like fiscal austerity and subsidy cuts which have never been strictly implemented, only to return for more aid to the international body, even as it was on a arms buying spree.
It is pertinent to mention that the United States holds approximately 16.5% of the voting power in the International Monetary Fund (IMF), making it the largest single voting bloc among the 190-member countries and a major bailout, as has been happening with Pakistan for decades now, cannot happen unless Washington wants it. This cycle of seeking financial help coincides with robust defence spending. According to World Bank data, Pakistan’s military expenditure averaged $3.8 billion annually from 1960 to 2023, peaking at $11.84 billion in 2021.
In 2022, defence consumed 17.9% of government expenditure— double India’s 8.3%—despite Pakistan’s GDP being one-tenth of India’s. From 2000 to 2023, defence spending ($153.25 billion) outstripped IMF loans ($20 billion in the same period), suggesting that military priorities were scaled back even during economic distress. For context, in 2023, Pakistan spent $8.54 billion on defence—more than its entire IMF debt at the time.
The scale of defence spending has led to concerns over whether IMF funds, meant for economic recovery, have either indirectly freed up budget resources for military purchases or are being diverted for arms purchase. As per official data, Pakistan’s outstanding IMF loans, at Special Drawing Rights (SDR) 6,229.52 million (amounting to $8.6 billion) as of March 2025, exceed four times its IMF quota (2,031 million SDRs, or $2.7 billion).
SDR is an international reserve asset created by the IMF and it can be converted into currencies like the US dollar, Euro, or other currencies. With only $133 million left of its $4 billion Special Drawing Rights allocation and repayments rising to $2 billion annually by 2028, Pakistan’s fiscal space for non-essential spending should ideally have been shrinking, but as the developments show, it has not