In a bold move that has stirred fresh controversy, the International Monetary Fund (IMF) has approved a $1 billion disbursement to Pakistan as part of its ongoing $7 billion bailout package. This marks the second major release, taking the total disbursed amount to $2 billion.

The announcement came from Pakistan Prime Minister Shehbaz Sharif's office, celebrating the decision as a “positive step” for the country's recovering economy. According to the PMO, Pakistan’s financial condition is “improving and moving towards development.”

But not everyone is clapping.

Just hours before the decision, India raised a red flag, urging the IMF to reconsider its financial aid to Pakistan. The reason? New Delhi claims Pakistan continues to sponsor cross-border terrorism, referencing the April 22 Pahalgam terror attack that reignited hostilities.

India’s Ministry of External Affairs strongly warned the IMF board that such funds might be diverted to military or terror-linked activities, and could seriously damage the reputation of international donors.

Despite India’s objections, the IMF went ahead with its scheduled review and unlocked the Extended Fund Facility (EFF). Additionally, a separate $1.3 billion under the Resilience and Sustainability Facility (RSF) is also being considered.

While IMF officials remained tight-lipped, the decision has sparked fresh debate on whether financial institutions should tighten accountability when funding nations accused of supporting terrorism.