India abstains from IMF vote on Pakistan's bailout package: Here are 3 reasons New Delhi gave

The International Monetary Fund on Friday (May 9) conducted a review of Pakistan’s Extended Fund Facility (EFF) lending program, valued at $1 billion, and evaluated a new Resilience and Sustainability Facility (RSF) lending program of $1.3 billion.

At the meeting, India expressed concerns about the effectiveness of IMF programs in Pakistan, citing the country’s poor track record and potential misuse of debt financing for state-supported cross-border terrorism. New Delhi also abstained from voting.

Here are the three key arguments made by India:

2. Pakistan, a long-term borrower from the IMF, is struggling with poor implementation and adherence to program conditions. Since 1989, Pakistan has received IMF funds in 28 out of 35 years. In the past five years alone there have been four IMF programs.

   Had these programs succeeded in establishing a solid macro-economic policy environment, Pakistan would not need another bailout. India argued that this history raises questions about either the effectiveness of IMF program designs for Pakistan or their monitoring and implementation by the country.

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3. The Pakistani military’s significant involvement in economic affairs poses considerable risks of policy slippages and reform reversals. Despite a civilian government currently in power, the military maintains a strong influence in domestic politics and economic matters. A 2021 UN report even described military-linked businesses as the “largest conglomerate in Pakistan.”

   This situation has not improved, with the Pakistan Army now playing a prominent role in the Special Investment Facilitation Council of Pakistan.

4. Rewarding ongoing sponsorship of cross-border terrorism sends a dangerous message to the global community, exposes funding agencies and donors to reputational risks, and undermines global values.

Concerns about the potential misuse of funds from international financial institutions like the IMF for military and state-supported terrorism were shared by several member countries. However, the IMF’s response is limited by procedural and technical constraints, highlighting the need to consider moral values in the procedures of global financial institutions.