New Delhi [India], May 9 : India has abstained from voting on the International Monetary Fund's (IMF) review of a USD1 billion Extended Fund Facility (EFF) and consideration of a fresh USD1.3 billion Resilience and Sustainability Facility (RSF) for Pakistan, according to a statement released today by the Ministry of Finance.
In its official statement, India raised significant concerns regarding Pakistan's track record with previous IMF loans and the potential misuse of funds for "state-sponsored cross-border terrorism."
The statement highlighted Pakistan's long history as a "prolonged borrower" from the IMF, noting that the country has received disbursements in 28 of the past 35 years since 1989. More recently, Pakistan has initiated four different IMF programs in just the last five years.
"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 Indian Ministry of Finance stated, questioning "either the effectiveness of the IMF program designs in case of Pakistan or their monitoring or their implementation by Pakistan."
India's concerns extended beyond economic considerations to governance issues, particularly the role of Pakistan's military in economic affairs. The statement pointed out that "Pakistan military's deeply entrenched interference in economic affairs poses significant risks of policy slippages and reversal of reforms." It referenced a 2021 UN report that described military-linked businesses as the "largest conglomerate in Pakistan" and noted the army's current leading role in Pakistan's Special Investment Facilitation Council.
Of particular concern to India was the potential for IMF funds to be diverted toward supporting terrorism. "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's statement read.
The Ministry also noted that while several other member countries shared India's concerns about the potential misuse of international financial assistance, "the IMF response is circumscribed by procedural and technical formalities." India characterized this as "a serious gap highlighting the urgent need to ensure that moral values are given appropriate consideration in the procedures followed by global financial institutions."
Despite India's objections, the IMF proceeded with its review of the loan programs, merely taking note of India's statements and its abstention from the vote.
The development comes amid ongoing tensions between the two neighboring nuclear powers, with India repeatedly accusing Pakistan of supporting terrorist activities in the regionallegations that Pakistan has consistently denied.
Financial analysts note that Pakistan's economy continues to face significant challenges, including high inflation, depleted foreign exchange reserves, and a substantial external debt burden, making international financial assistance crucial for the country's economic stability.
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