IMF bailout, May 16 -- Despite strong reservations from India, the International Monetary Fund (IMF) last week approved the immediate disbursement of about $1 billion to Pakistan as part of a bailout package. After Pakistan, Bangladesh recently got the IMF's green light for receiving $1.3 billion in bailout funds, to be disbursed in multiple tranches.

A bailout generally refers to financial support extended to an entity at risk of bankruptcy. Countries typically turn to the IMF when they face severe macroeconomic challenges, such as currency crises, mounting external debt, or dwindling foreign reserves.

When a country borrows from the IMF, it commits to implementing specific policy reforms aimed at addressing the underlying economic iss...