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The International Monetary Fund (IMF) has approved the release of a $2.3 billion financial package for Pakistan, sparking sharp concerns from India. The package includes a $1 billion second tranche under Pakistan’s Extended Fund Facility (EFF) and an additional $1.3 billion under a new Resilience and Sustainability Facility (RSF).
While the IMF’s decision was aimed at stabilizing Pakistan’s fragile economy, India strongly objected, raising serious questions about Islamabad’s poor track record with past IMF loans and the potential misuse of international funding for state-sponsored cross-border terrorism.
India Flags Misuse Risks, Calls Out Pakistan’s Track Record
According to diplomatic sources, India did not support the IMF’s decision and instead abstained from the vote. Indian officials argued that despite receiving IMF aid for decades, Pakistan has consistently failed to meet economic reform goals.
“In the 35 years since 1989, Pakistan has received IMF disbursements in 28 years,” Indian representatives said, adding that four bailout programs were initiated in the last five years alone. “Had the previous programs succeeded in stabilizing the macro-economic framework, Pakistan wouldn’t need yet another bailout.”
Concerns Over Military Control in Pakistan’s Economy
India also highlighted the entrenched role of Pakistan’s military in economic decision-making, warning that it could derail any genuine reform efforts. Even under a civilian-led government, the Pakistan Army continues to dominate through economic entities and institutions like the Special Investment Facilitation Council.
Quoting a 2021 UN report, Indian officials pointed out that the Pakistani military runs the largest conglomerate in the country, raising questions about transparency, accountability, and the real beneficiaries of IMF funds.
Political Influence in IMF Lending Questioned
India referred to the IMF’s own evaluation report on Pakistan, which noted a widespread perception that “political considerations” influence IMF decisions in Pakistan’s case. This perception, India argued, undermines the credibility of global financial institutions.
India also emphasized that repeated bailouts have only worsened Pakistan’s debt burden, creating a dangerous situation where the country is now considered “too big to fail” for the IMF — despite being a chronic underperformer.
Cross-Border Terrorism a Core Concern
India took strong exception to the possibility that fungible IMF funds could be diverted to finance military operations and terrorism.
“Rewarding a country that continues to sponsor cross-border terrorism sends a dangerous message to the international community,” said Indian officials. “It puts global financial institutions and donors at reputational risk and makes a mockery of shared international values.”
India’s concerns reportedly resonated with other IMF member countries, but the institution went ahead with the approval citing “procedural and technical grounds”. However, the IMF did take note of India’s objections and formal abstention.
