India has expressed reservations at the International Monetary Fund (IMF) over the approval of lending programs for Pakistan and abstained from the vote approving the new package, citing concerns about the country’s economic track record and the potential misuse of funds. Amid the escalating tensions between India and Pakistan, the IMF on Friday, May 9, reviewed the Extended Fund Facility (EFF) of $1 billion and a proposed Resilience and Sustainability Facility (RSF) of $1.3 billion for Pakistan.
The EFF is an IMF program that provides medium-term financial support to countries tackling structural economic issues and balance of payments problems. The RSF offers longer-term funding to help countries build resilience against external shocks like climate change, supporting sustainable development alongside economic reforms.
In a detailed statement, India said that Pakistan had a poor track record with IMF programs over the past three decades. Of the 35 years since 1989, Pakistan has sought IMF assistance in 28, and in just the last five years, it has already received support through 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 yet again,” the Indian delegation said.
India stated that this repeated reliance on IMF support points to the ineffectiveness of either the Fund’s program designs in the case of Pakistan or their implementation by the country. One particular concern raised by the country was the possibility that the debt financing provided under IMF programs could be misused for state-sponsored terrorism. India warned that rewarding a state with such a record risks sending a dangerous message to the international community.
Citing Pakistan’s “deeply entrenched” military interference in its economy, India pointed to the risks of policy slippages and reversal of reforms. Despite being under a civilian government, the Pakistani military continues to wield significant influence over domestic policymaking and economic institutions. A 2021 UN report had described military-linked enterprises as the “largest conglomerate in Pakistan.” According to India, the military’s dominance has only deepened, with the Pakistan Army now playing a leading role in the Special Investment Facilitation Council of Pakistan.
India also flagged concerns in the IMF’s own assessment report titled ‘Evaluation of Prolonged Use of IMF Resources.’ The report noted widespread perceptions that political considerations, not just financial criteria, played a role in Pakistan’s continued access to IMF funds.
According to India, such leniency toward a country allegedly sponsoring cross-border terrorism not only exposes international funding agencies to reputational risks, but also undermines global financial integrity. India urged the IMF and other member nations to ensure that moral values and global security concerns are given due weight in financing decisions.
The IMF has acknowledged India’s concerns and its decision to abstain, the statement said.
