‘Too big to fail debtor’: India targets Pakistan on IMF bailout package; abstains from voting over misuse of funds for terrorism
India-Pakistan tensions: India on Friday raised concerns over IMF bailout packages and programs for Pakistan at the International Monetary Fund’s Executive Board meeting. “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,” India said while abstaining from voting.The continuous financial assistance has resulted in Pakistan accumulating substantial debt, ironically positioning it as a ‘ too big to fail debtor’ for the IMF, India said.The IMF conducted a review today of Pakistan’s Extended Fund Facility (EFF) lending programme ($1 billion) whilst evaluating a new Resilience and Sustainability Facility (RSF) lending programme ($1.3 billion). India expressed reservations regarding the effectiveness of IMF initiatives for Pakistan, considering its inadequate historical performance. Additionally, India voiced apprehension about the potential diversion of debt financing resources towards state-backed terrorism across borders.“In the 35 years since 1989, Pakistan has had disbursements from the IMF in 28 years. In the last 5 years since 2019, there have been 4 IMF programs. Had the previous programs succeeded in putting in place a sound macro-economic policy environment, Pakistan would not have approached the Fund for yet another bail-out program. India pointed out that such a track record calls into question either the effectiveness of the IMF program designs in case of Pakistan or their monitoring or their implementation by Pakistan,” the Ministry of Finance release read.Also Read | Operation Sindoor: Can Pakistan economically afford a protracted conflict with India as tensions escalate? Here’s a reality checkIndia pointed out the extensive involvement of Pakistan’s military in economic matters significantly threatens policy implementation and reform sustainability. Despite civilian leadership being in power, the military maintains substantial influence over both political landscape and economic decisions, India said. A United Nations report from 2021 identified military-affiliated enterprises as the “largest conglomerate in Pakistan”.The scenario has intensified with the army now occupying a central position in Pakistan’s Special Investment Facilitation Council, it added.India raised concerns about the IMF’s assessment of Pakistan’s prolonged use of its resources, as detailed in IMF’s own evaluation report. The document acknowledged a common understanding that political factors significantly influence IMF’s lending decisions regarding Pakistan. India emphasised that providing financial support despite ongoing cross-border terrorism activities sends an inappropriate signal to the international community, potentially compromises the reputation of funding organisations and contributors, and undermines universal principles.Also Read | Big economic setback! Pakistan economy has more to lose than India – Moody’s warning amid ongoing tensionsAlthough numerous member nations shared apprehensions about the possible misallocation of fungible resources from international financial bodies like IMF towards military activities and state-backed terrorism, the IMF’s actions remain constrained by institutional protocols and technical requirements.“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. The IMF took note of the India’s statements and its abstention from the vote,” the Ministry of Finance statement said.
