The new conditions imposed on Pakistan include the parliamentary approval of a new Rs 17.6 trillion budget, an increase in the debt servicing surcharge on electricity bills and lifting restrictions on import of more than three-year-old used cars.

Despite India's protests, the IMF board approved the second instalment of a $7bn loan, saying Islamabad had demonstrated strong programme implementation leading to a continuing economic recovery in Pakistan.

Indian Defence Minister Rajnath Singh said Friday the International Monetary Fund (IMF) should reconsider a one billion dollar loan to Pakistan alleging it was "funding terror", a move denounced by Islamabad as proof of New Delhi's desperation.