Washington D.C. — The International Monetary Fund (IMF) recently conducted a review of Pakistan’s $1 billion Extended Fund Facility (EFF) program. Simultaneously, the IMF considered a new $1.3 billion Resilience and Sustainability Facility (RSF) loan for the nation. However, these discussions were shadowed by concerns raised by India, an active member of the IMF, regarding the efficacy of repeated financial bailouts to Pakistan.

india Questions the Effectiveness of IMF Programs

India has voiced skepticism about the long-term benefits of IMF assistance to Pakistan,citing the country’s history of reliance on such aid. India noted that Pakistan has received IMF disbursements in 28 of the past 35 years. The core of india’s argument centers on the recurring nature of these bailouts.

In the last five years alone, there have been four IMF programs. Had the previous programs succeeded, Pakistan would not have needed yet another bailout.

Indian Representative to the IMF

This raises fundamental questions, according to India, about the effectiveness of the IMF program designs, their monitoring, or their implementation by Pakistan.

The Role of Pakistan’s Military in Economic Affairs

A significant point of contention for India is the pervasive influence of Pakistan’s military in the nation’s economic landscape. India argues that this involvement undermines reform efforts and creates instability.

Even with a civilian government in power, the army continues to play an outsized role in domestic politics and extends its tentacles deep into the economy.

Indian Representative to the IMF

India referenced a 2021 United Nations report that characterized military-linked businesses as Pakistan’s largest conglomerate. This level of economic control by the military raises concerns about transparency and equitable resource allocation.

Political Considerations and Debt Burden

India also highlighted findings from the IMF’s own Evaluation Report, which suggested that political considerations have an importent role to play in IMF lending to Pakistan. The concern is that these considerations may lead to repeated bailouts, resulting in a dangerously high debt burden for Pakistan.

The accumulation of debt, according to India, has positioned Pakistan as a too big to fail debtor for the IMF. This situation creates a cycle of dependency and potentially compromises the IMF’s financial integrity.

Concerns Over Terrorism Funding

A especially sensitive issue raised by India is the potential misuse of IMF funds to support cross-border terrorism. India voiced strong objections,asserting that rewarding continued sponsorship of cross-border terrorism sends a risky message to the global community.

India warned that such funding risks exposing agencies and donors to reputational harm and makes a mockery of global values. This concern underscores the need for stringent oversight and accountability in the disbursement of IMF funds.

Call for reform and Moral Values

India has urged the IMF and other international institutions to integrate moral values more effectively into their lending decisions. India noted that the concern that fungible inflows could be misused for military and terrorist purposes resonated with several member countries. Though, india also observed that the IMF’s response remains circumscribed by procedural and technical formalities.

The IMF acknowledged India’s concerns and noted its abstention from the vote on the new program for Pakistan. this abstention signals a significant level of disagreement and highlights the ongoing debate surrounding the effectiveness and ethical implications of providing financial assistance to Pakistan.