New Delhi: India has sharply criticised the International Monetary Fund’s (IMF) ongoing financial assistance to Pakistan, warning that repeated bailouts risk enabling state-sponsored cross-border terrorism and undermining the integrity of the global financial system. The strong objections were raised during the IMF’s review on May 9 of a $1 billion Extended Fund Facility (EFF) for Pakistan and consideration of a new $1.3 billion Resilience and Sustainability Facility (RSF) lending program. India, a member of the IMF, abstained from the vote, signaling its profound concerns over Pakistan’s financial track record and the potential for misuse of funds.
The Indian delegation did not mince words, questioning the very effectiveness of the IMF’s repeated interventions in Pakistan’s struggling economy. Highlighting Pakistan’s persistent reliance on IMF bailouts – a staggering 28 times in the past 35 years – India argued that this chronic dependence demonstrates a failure to implement meaningful and sustained macroeconomic reforms. The fact that Pakistan has been under four separate IMF programs in just the last five years, India pointed out, strongly suggests fundamental flaws in the design and monitoring of these programs, or a deliberate lack of compliance by Islamabad.
A central point of contention for India is the pervasive and continuous involvement of the Pakistani military in the nation’s economic governance. Citing a 2021 United Nations report that unequivocally described the Pakistani military’s extensive economic interests as the country’s “largest conglomerate,” India underscored the concerning trend of the armed forces assuming a leading role in the recently established Special Investment Facilitation Council. This development, according to India, significantly elevates the risk of policy deviations and undue influence, even under a civilian administration.
Furthermore, India drew attention to the IMF’s own internal evaluation report on the prolonged use of its resources, which reportedly flagged perceptions of political considerations unduly influencing lending decisions in Pakistan’s case. India cautioned that the IMF’s repeated bailouts risk transforming Pakistan into a “too-big-to-fail” debtor, thereby eroding accountability and undermining established global financial norms.
Perhaps the most significant and alarming concern voiced by India was the potential for IMF funds to be diverted for military purposes or, even more gravely, to finance state-sponsored terrorism. The Indian delegation reportedly asserted that “rewarding continued sponsorship of cross-border terrorism sends a dangerous message, exposes donors to reputational risks, and makes a mockery of global values.” This pointed statement directly addresses India’s long-standing accusations against Pakistan for its alleged support of terrorist activities across its borders.
While several other member countries reportedly echoed India’s concerns regarding Pakistan’s economic management and the effectiveness of IMF programs, the IMF maintained that its responses are often constrained by procedural and technical limitations. In response, India called for crucial reforms within the IMF to ensure that moral and security considerations are more effectively integrated into the Fund’s lending decisions.
Despite the strong reservations voiced by India and some other nations, the IMF has proceeded with deliberations on the new financial package for Pakistan. India’s abstention during any potential vote, while a significant diplomatic signal of its disapproval, is unlikely to block the proposal due to the IMF’s weighted voting system, where larger economies hold greater voting power.
