Daijiworld Media Network - New Delhi
New Delhi, May 9: India has sharply criticised the International Monetary Fund (IMF) for its continued financial support to Pakistan, warning that bailout funds risk being misused for cross-border terrorism and military activities.
At the IMF executive board meeting held on Friday, India abstained from voting on two key financial packages for Pakistan, raising strong concerns over the country's fiscal credibility and governance record.
The IMF meeting was convened to review Pakistan’s $1 billion Extended Fund Facility (EFF) programme and to evaluate a new $1.3 billion Resilience and Sustainability Facility (RSF). India objected to Pakistan’s long-standing reliance on IMF assistance and its poor track record of implementing reform conditions.
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“Pakistan has been a prolonged borrower from the IMF, with a very poor track record of implementation and of adherence to the IMF’s programme conditions,” India stated. “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 added.
Highlighting Pakistan’s repeated reliance on IMF aid, India noted that since 1989, Pakistan has received disbursements from the Fund in 28 out of 35 years, and four separate programmes have been initiated since 2019 alone. “Had the previous programmes succeeded in putting in place a sound macro-economic policy environment, Pakistan would not have approached the Fund for yet another bailout programme,” read a statement from the Ministry of Finance.
“Such a track record calls into question either the effectiveness of the IMF programme designs in the case of Pakistan, or their monitoring, or their implementation by Pakistan," the statement added.
India also raised grave concerns about the diversion of international debt financing to fund state-backed terrorism, noting that fungible resources could be misallocated in ways that threaten international peace and security.
In a pointed observation, India underscored that the Pakistani military’s deep entanglement in economic decision-making undermines reform efforts and distorts governance. “Despite civilian leadership being in power, the military maintains substantial influence over both the political landscape and economic decisions,” India said.
It cited a 2021 United Nations report which identified military-affiliated enterprises as the largest conglomerate in Pakistan. The situation has further intensified with the military now occupying a central position in Pakistan's Special Investment Facilitation Council.
India also referred to the IMF’s own internal evaluation, which recognised that political factors often influence lending decisions for Pakistan.
“The IMF’s assessment of Pakistan’s prolonged use of its resources clearly acknowledged the influence of non-economic considerations. 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,” India argued.
The ministry of finance stressed that continued funding under these circumstances could damage the credibility of international institutions.
“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,” the ministry stated.
Although several IMF member countries echoed India’s apprehensions about the misuse of international resources for military and terrorist objectives, the IMF remains constrained by institutional protocols and technical criteria.
India concluded its statement by urging a more values-driven approach to lending decisions and formally abstained from the vote on Pakistan’s programmes. The IMF took note of India's position and the concerns expressed.