NEW DELHI: Despite strong reservations expressed by India against the disbursal of a $1 billion loan facility to Pakistan, the International Monetary Fund (IMF) on Friday approved the bailout package, a finance ministry official confirmed.
India abstained from voting on the proposal to disburse the loan, raising concerns about the efficacy of the IMF bailout package in light of Pakistan’s poor track record. India also expressed fears that the country could misuse the debt to fund state-sponsored cross-border terrorism.
The IMF reviewed the Extended Fund Facility lending programme ($1 billion) and also considered a fresh Resilience and Sustainability Facility lending programme ($1.3 billion) for Pakistan.
Arguing against another bailout to Pakistan, India contended that its neighbor has been a prolonged borrower from the IMF, with a very poor track record of implementation and adherence to the programme conditions. India pointed out that such track record calls into question either the effectiveness of the IMF programme in case of Pakistan or their monitoring and implementation by Pakistan.
India highlighted Pakistan army’s deeply entrenched interference in economic affairs, which poses significant risks of policy slippages and reversal of reforms. It said even with a civilian government is in power, the army continues to exert influence in domestic politics and extends its tentacles deep into the economy. It pointed out that a 2021 UN report described military-linked businesses as the “largest conglomerate in Pakistan”.
The Indian delegation reiterated that rewarding continued sponsorship of cross-border terrorism sends a dangerous message to the global community, exposes funding agencies and donors to reputational risks, and makes a mockery of global values.
India also expressed dissapointment over IMF’s response to concern over Pakistan’s misuse of funds to support terrorism.