E-Paper
India opposes IMF $2.3 billion bailout package to Pakistan, abstains from voting
The IMF meeting approved the EFF lending program ($1 billion) and a fresh RSF lending program ($1.3 billion), a government statement said.
India on Friday contested the International Monetary Fund’s (IMF) decision to provide a $2.3 billion bailout package to Pakistan, citing its poor track record of misusing development funds and abstained from a vote on it at the IMF board’s meeting.
The meeting approved the Extended Fund Facility (EFF) lending program ($1 billion) and a fresh Resilience and Sustainability Facility (RSF) lending program ($1.3 billion), a government statement said.
“As an active and responsible member country, India raised concerns over the efficacy of IMF programs in the case of Pakistan given its poor track record, and also on the possibility of misuse of debt financing funds for state-sponsored cross-border terrorism,” the finance ministry said in a statement.
India flagged the Pakistan chapter of the IMF Report on Evaluation of Prolonged Use of IMF Resources, which noted that there was a widespread perception that political considerations have an important role to play in the IMF lending to Pakistan. As a result of repeated bailouts, Pakistan’s debt burden is very high, which paradoxically makes it a too-big-to-fail debtor for the IMF, the statement said.
India also pointed out 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.
While the concern that fungible inflows from international financial institutions such as the IMF could be misused for military and state-sponsored, cross-border terrorism activities resonated with several member countries, the IMF's response is restricted by procedural and technical formalities. This is a serious gap highlighting the urgent need to ensure that moral values are given appropriate consideration in the procedures followed by global financial institutions, the statement further said.
The Congress party criticised the government for only abstaining and not voting against the resolution. The finance ministry’s spokesperson for matters related to IMF could not be reached, but an official in the North Block said, “Traditionally we abstained from voting at IMF [on such matters].”
To be sure, negative voting is not allowed in the IMF’s executive board. A member can either vote in favour of a proposal or abstain.
Congress questioned the government’s move. “On April 29th, the INC had demanded that India vote against the IMF loan to Pakistan, which was considered today by its executive board. India has only abstained from the vote. The Modi Government has chickened out. A strong NO would have sent a powerful signal,” Congress leader Jairam Ramesh said in a post on X.
According to another official, India failed to dissuade IMF from extending the bailout package to Pakistan at a time when Islamabad perpetrated the April 22 attack in Pahalgam that killed 26 innocent Indians. “It is quite clear that the financial package to Pakistan is almost sanctioned,” he said, requesting anonymity.
Pakistan has been a persistent borrower from the IMF, with a very poor track record of implementation and of adherence to the IMF’s programme conditions. Pakistan has had disbursements from the IMF in 28 years out of the 35 years since 1989. In the last five years, since 2019, there have been four IMF programs. “Had the previous programs succeeded in putting in place a sound macro-economic policy environment, Pakistan would not have approached the Fund for yet another bail-out program,” the statement said.
“India pointed out that such a track record calls into question either the effectiveness of the IMF program designs in case of Pakistan or their monitoring or their implementation by Pakistan,” it said. “The IMF took note of the India’s statements and its abstention from the vote,” it further said.
Pakistan military’s deeply entrenched interference in economic affairs poses significant risks of policy slippages and reversal of reforms. Even when a civilian government is in power now, the army continues to play an outsized role in domestic politics and extends its tentacles deep into the economy. In fact, a 2021 UN report described military-linked businesses as the “largest conglomerate in Pakistan”. The situation has not changed for the better; rather the Pakistan Army now plays a leading role in the Special Investment Facilitation Council of Pakistan, the statement added.
