India Abstains From Voting At IMF Meet That Discussed Fresh Loans To Pakistan: Finance Ministry
India also highlighted that Pakistan has been a prolonged borrower from the IMF, with a very poor track record of implementation and of adherence to the IMF’s program conditions.
CHENNAI: India on Friday abstained from voting on IMF’s proposed $1.3 billion bailout package for Pakistan, while raising concerns about the possibility of “Islamabad misusing of debt financing funds for state sponsored cross border terrorism”.
The International Monetary Fund (IMF) reviewed the Extended Fund Facility (EFF) lending programme of $1 billion and also considered a fresh Resilience and Sustainability Facility (RSF) lending programme $1.3 billion for Pakistan.
“As an active and responsible member country, India raised concerns over the efficacy of IMF programs in 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 government said in a statement. India had raised its concerns on the bailout package in the backdrop of the Pahalgam terror attack on April 22.
India 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, like IMF, could be misused for military and state sponsored cross border terrorist purposes resonated with several member countries, the IMF response is circumscribed 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,” India told the IMF Board. India’s Parameswaran Iyer was a nominee director in the board of IMF that considered Pakistan’s review.
India also highlighted that Pakistan has been a prolonged borrower from the IMF, with a very poor track record of implementation and of adherence to the IMF’s program conditions. Pakistan military’s deeply entrenched interference in economic affairs poses significant risks of policy slippages and reversal of reforms.
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.
With elevated debt levels and low reserve buffers, Islamabad had managed to get a bailout package from the IMF in September 2024 with the approval of a $7-billion loan. The ongoing 37-month long Extended Fund Facility programme consists of six reviews over the span of the bailout.
Islamabad’s external debt had jumped to over $130 billion in 2024, over a fifth of which was estimated to be owned by China. On the other hand, Pakistan’s forex reserves were pegged at a little over $15 billion.
