India Raises Objection To IMF Bailout For Pakistan, Cites Terror Funding Concerns, Poor Track Record

On Friday, India formally raised objections to a proposed International Monetary Fund (IMF) bailout package for Pakistan, citing concerns over the country's poor track record and the potential misuse of funds to support state-sponsored cross-border terrorism.

The IMF reviewed Pakistan's request for a $1 billion disbursement under its Extended Fund Facility (EFF), alongside a fresh $1.3 billion under the Resilience and Sustainability Facility (RSF).

As a participating IMF member, India expressed scepticism about the effectiveness of the Fund's programmes in the case of Pakistan.

Indian representatives noted that Pakistan has historically misused debt-financing, particularly in the context of sponsoring terrorism. India abstained from voting, and its objections were officially recorded by the IMF.

This intervention comes against the backdrop of heightened military tensions between the two nations following Indian missile strikes on "terror targets" within Pakistan and Pakistan-occupied Kashmir.

The strikes were in retaliation for the Pahalgam terror attack on 22 April, which left 26 civilians dead.

India's statement

India highlighted Pakistan's status as a "prolonged borrower" with an inconsistent history of adhering to programme requirements. It pointed out that Pakistan has received IMF assistance for 28 of the past 35 years.

In the last five years alone, Pakistan has entered four separate IMF arrangements.

India questioned why a country requiring so many consecutive programmes would now need yet another rescue package, suggesting either systemic flaws in IMF oversight or Pakistan's non-compliance.

Key points raised by India included

* Pakistan's repeated reliance on IMF support undermines confidence in the Fund's programme enforcement and in Islamabad's reform commitment.

* The Pakistani military's pervasive involvement in economic affairs creates risks for credible policymaking. India cited a 2021 UN report describing military-run businesses as the nation's largest corporate entity.

* India referenced the IMF's own report on the prolonged use of resources, which acknowledged the perception that political factors influence lending decisions to Pakistan.

* India warned that continued financial support to a state sponsoring terrorism carries reputational risks for global lenders and weakens international norms.

* It urged the IMF and other global financial institutions to incorporate moral and ethical considerations into their funding criteria.