Pakistan defence minister thinks it won’t need IMF loans soon. Is this just a fantasy?

Pakistani defence minister’s bizarre remark about not needing the International Monetary Fund (IMF) in the near future has hardly sparked confidence in anyone. The comment has instead spread disbelief, given the cash-strapped country’s long-standing reliance on the “lender of last resort”.

The IMF had approved a $7 billion loan to Pakistan in September 2024, the country’s 24th since 1958. It is now the third country to owe the most to the global lender after Argentina and Ukraine.

Let’s take a closer look.

What Pak minister said

Pakistan Defence Minister Khawaja Asif told Geo News earlier this week that the South Asian country may not need IMF loans within six months, citing the rise in demand for defence equipment.

He claimed that Pakistan showcased its “resolve and military effectiveness” during Operation Sindoor in May when India and Pakistan engaged in a brief conflict.

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“Our aircraft have been tested, and we are receiving so many orders that Pakistan may not need the IMF in six months,” he said.

India had carried out military strikes on nine terror hubs in Pakistan and Pakistan-occupied Kashmir (PoK) in May 2024 in the aftermath of the Pahalgam terror attack. Islamabad made unverified claims that it downed multiple Indian jets, including French-made Rafale aircraft.

Asif’s remarks came after a Bangladeshi defence delegation reportedly met Pakistan’s air chief to discuss a potential sale of the JF-17 Thunder, the multi-role fighter jet jointly developed by China and Pakistan.

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As per a Reuters report, Pakistan and Saudi Arabia are also in talks to convert about $2 billion of Saudi loans into a JF-17 fighter jet deal.

Aamir Masood, a retired Air Marshal and analyst, told the news agency that Pakistan was discussing or had finalised deals with six countries to provide equipment, including JF-17s and electronic systems and weapons systems for the jets.

Last month, Islamabad agreed to a weapons deal worth more than $4 billion with Libya’s eastern-based Libyan National Army, which includes JF-17 fighter jets and training aircraft.

Pakistan reportedly struck export deals worth nearly $10 billion in 2025, the highest so far. But its global share in arms exports remains insignificant.

Pakistan’s deep reliance on IMF

Pakistan has relied on the IMF for financial assistance since 1958. In fact, it is one of the lender’s most frequent borrowers.

As of January 7, 2026, the country owes 7,416,800,007 SDRs (Special Drawing Rights) or $10.61 billion to the global financial institution.

The IMF approved a 37-month-long, $7 billion loan programme to cash-strapped Pakistan in September 2024 under its Extended Fund Facility (EFF) to help the country stabilise its economy.

This came after it approved a $3 billion bailout for Pakistan in July 2023, which helped the South Asian country narrowly avoid default.

The IMF steps in only when countries face severe economic woes and cannot take loans from usual borrowing channels. However, its loans come with stringent conditions that could include austerity measures and increase social and economic hardships.

In December 2024, the IMF green-lit $1.2 billion in funds to Pakistan, which allows the country to withdraw $1 billion under EFF and $200 million under the climate-focused Resilience Sustainability Facility. The global lender said that Islamabad “maintained stability” despite the devastating floods.

With this, Islamabad has received around $3.3 billion from the IMF since 2024.

The IMF’s conditions to provide the loan to Pakistan include raising revenue and advancing the privatisation of state-owned companies. Amid pressure from the IMF, the Pakistani government sold a majority stake in Pakistan International Airlines (PIA) for $482 million to a private consortium last month.

Pakistani economy remains weak

While Pakistan stabilised its economy last year, the reprieve is believed to be short-term.
An IMF assessment in November 2025 found that Pakistan’s economic crisis is driven by “state capture”, where public policy is exploited to benefit a few political and business elites.

According to reports, economic privileges granted to Pakistan’s elite, including politicians and the powerful military, cost the country roughly six per cent of its GDP.

Repeated bailouts from the IMF and Chinese loans and investments in infrastructure have helped Pakistan economy evade a total collapse.

Credit ratings agencies S&P Global, Fitch and Moody’s upgraded Pakistan’s credit ratings in 2025, citing stronger finances and revenue gains.

Still, poverty remains high in Pakistan. According to the World Bank’s report, poverty rose to 25.3 per cent in 2024-25 in the South Asian nation, a seven per cent jump in three years.

Nearly half the population in Pakistan lives below the lower-middle-income poverty line. Rural areas, especially Balochistan and interior Sindh, are the most affected.

Last month, the IMF projections found that Pakistan’s economy remains afflicted by “high debt, weak investment and slow employment growth”, reported Dawn.

It estimated that Pakistan’s economic growth could inch up from 2.6 per cent in the financial year (FY) 25 to 3.2 per cent by FY26, a pace that does not keep up with the population growth in the country of 240.5 million people.

“In terms of inflation, after averaging 23.4 per cent in FY-24, consumer prices are estimated to have fallen sharply to 4.5 per cent in FY-25, and projected to rise to 6.3 per cent in FY-26,” the IMF report said.

Total general government debt, including IMF loans, is projected to stand around 72-73 per cent of the country’s GDP, while government and guaranteed debt is likely to stay near 76 per cent, as per the global lender.

Pakistan reported GDP growth of 3.04 per cent during FY25, according to estimates by the Pakistan Bureau of Statistics (PBS) in October.

“Taken together, the IMF projections for Pakistan suggest that the immediate risk of economic free fall has eased, but the country remains locked into a narrow stabilisation path marked by weak growth, heavy debt and limited relief for households,” the report said.

With inputs from agencies