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After IMF, another bailout package for Pakistan; ADB okays $800 mn aid despite India's objection
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  • After IMF, another bailout package for Pakistan; ADB okays $800 mn aid despite India's objection

After IMF, another bailout package for Pakistan; ADB okays $800 mn aid despite India's objection

FP News Desk • June 4, 2025, 17:05:36 IST
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The ADB package comes just days after Islamabad secured a $1 billion package from the IMF despite New Delhi’s objections

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After IMF, another bailout package for Pakistan; ADB okays $800 mn aid despite India's objection
Pakistan's Prime Minister Shehbaz Sharif. File image/ Reuters

The Asian Development Bank (ADB) on Wednesday (June 4) approved a $800 million bailout package for Pakistan despite India’s “vehement objections”. New Delhi was opposed to any financial assistance to Pakistan over its role in terror financing in the region.

The ADB package comes just days after Islamabad secured a $1 billion package from the IMF . India had criticised the IMF’s decision, with Defence Minister Rajnath Singh saying the money would be used to finance terrorism.

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The new ADB package is aimed at improving public financial management, at least on paper. Out of the $800 million package, $300 million is a policy-based loan, while the rest is programme-based guarantee.

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India registered its strong objection

According to sources, the Indian government had strongly objected to ADB’s financial aid to Pakistan, citing concerns of misuse.

India highlighted how Pakistan was rapidly ramping up its defence budget despite economic fragility and tax revenue dropping from 13 per cent of GDP in 2018 to just 9.2 per cent in 2023.

New Delhi fears that Pakistan could channel money meant for growth to boost defence spending.

India argues that this misuse of funds is the reason why Pakistan has failed to overcome economic challenges even after securing multiple loans from the ADB and the IMF.

India unhappy over Pak military’s role in economy

India also pointed out Pakistan’s poor governance and the large role its military plays in the economy. It noted that the military’s influence is strong, particularly through the Special Investment Facilitation Council.

This council was established in June 2023 to encourage and support investment, especially foreign direct investment.

India also expressed serious concerns about Pakistan’s support for cross-border terrorism and its failure to comply with important mandates of the Financial Action Task Force (FATF), such as freezing the assets of UN-designated terrorist groups.

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India emphasised that these issues not only threaten regional peace but also increase the risk for the Asian Development Bank (ADB).

India is likely to push the FATF to put Pakistan back on its ‘grey list’, which would increase scrutiny on its financial transactions.

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