Ceasefire first, then funds: US pressured Pakistan over $1 bn IMF loan, say government sources

The United States played a role in de-escalation by placing direct pressure on Pakistan, linking the provisional release of a $1 billion IMF loan to immediate acceptance of the ceasefire, with the remainder contingent on full compliance, government sources said. 

After four days of missile strikes and military posturing, India and Pakistan have agreed to a halt in military operations — brokered by a direct military call, not diplomacy, Indian officials clarified on May 10. 

The agreement was reached between the two countries after the Pakistan side reached out to India. 

Foreign Secretary Vikram Misri confirmed that the arrangement was initiated by a call from the Pakistani Director General of Military Operations at 15:35 IST. 

“It was agreed between them that both sides will stop firing and military action on land, air, and sea from 17:00 hrs IST today,” Misri said. The two DGMOs will speak again on May 12 at noon.  

US President Donald Trump on May 10 said that India and Pakistan have agreed to a full and immediate ceasefire. Trump said that the countries agreed to do so after a long night of talks mediated by the States. He also congratulated both the countries for “using common sense and great intelligence”. 

“After a long night of talks mediated by the United States, I am pleased to announce that India and Pakistan have agreed to a FULL AND IMMEDIATE CEASEFIRE. Congratulations to both countries on using common sense and great intelligence. Thank you for your attention to this matter!” Trump said in a post on Truth Social.  

"Over the past 48 hours, Vice President Vance and I have engaged with senior Indian and Pakistani officials, including Prime Ministers Narendra Modi and Shehbaz Sharif, External Affairs Minister Subrahmanyam Jaishankar, Chief of Army Staff Asim Munir, and National Security Advisors Ajit Doval and Asim Malik. I am pleased to announce the Governments of India and Pakistan have agreed to an immediate ceasefire and to start talks on a broad set of issues at a neutral site. We commend Prime Ministers Modi and Sharif on their wisdom, prudence, and statesmanship in choosing the path of peace," Marco Rubio, US Secretary of State, said in a press release.

The International Monetary Fund (IMF) cleared a $1-billion tranche for Pakistan as part of its $7-billion Extended Fund Facility (EFF) lending program and $1.3 billion tranche under the Resilience and Sustainability Facility (RSF) in its board meeting held on May 9.  

India abstained from voting in the meeting as it raised concerns over the efficacy of IMF programmes for Pakistan given its “poor track record” and also on the possibility of “misuse of debt financing funds for state-sponsored cross-border terrorism”, an official release by the Ministry of Finance, Government of India said.