India gets lavish praise, Pakistan bailout loan from IMF: Contrasting tales of ‘midnight’s children’

Seven decades later, the difference between two countries carved out of British India could not be starker: while IMF chief Kristalina Georgieva dubbed India “a key growth engine” for the world and praised its “bold” economic reforms, cash-strapped Pakistan has bagged another bailout loan from the International Monetary Fund (IMF) to the tune of $1.2 billion to keep its economy afloat.

The IMF on Tuesday said it reached a staff-level agreement with Pakistan for the disbursal of the tranche of $1.2 billion loan as part of a bailout package.

On the other hand, Georgieva praised India as being key to global growth in contrast to China.

“Global growth patterns have been changing over the years, notably with China decelerating steadily while India develops into a key growth engine,” said Georgieva.

‘I am very big on India’

Georgieva said that she was rooting for India because of “bold” reforms that proved critics wrong.

“I’m very big on India because of the boldness of their reforms. For example, everyone told India that digital identity on a mass scale could not be done… but India proved them wrong,” said Georgieva.

As for India’s place in the global growth, Georgieva said, “Global growth is forecast at roughly 3 per cent over the medium term — down from 3.7 per cent before the pandemic. Global growth patterns have been changing over the years, notably with China decelerating steadily while India develops into a key growth engine.”

Georgieva further said that India has been “proving its doubters wrong” through bold reforms and policies.

As for the world economy, Georgieva said that it appears that it has largely weather recent shocks like policy shifts and American tariffs.

“All signs point to a world economy that has generally withstood acute strains from multiple shocks,” said Georgieva, crediting improved policy fundamentals, private sector adaptability, and more favourable financial conditions.

Meanwhile, Pakistan gets another loan

While Georgieva talked of India’s potential, her organisation negotiated the latest tranche of loan to Pakistan.

Since its creation in 1947, Pakistan has secured 25 bailout packages from the IMF — the latest worth $7 billion was secured last year. Previously, Pakistan had secured a bailout package to the tune of $6 billion in 2019.

The IMF said on Tuesday it had reached a staff-level agreement with Pakistan for the disbursal of the tranche of $1.2 billion as part of the bailout package.

Separately, Pakistani Finance Minister Muhammad Aurangzeb told Reuters that the government would further borrow to the tune of $1 billion from other international lenders.

In May, India said that continued IMF assistance to Pakistan essentially rewarded its cross-border terrorism. India further said that the outsized role of the military in the country’s affairs, including in the implementation of the IMF-assisted economic recovery, should make Pakistan ineligible for assistance.

“India pointed out that rewarding continued sponsorship of cross-border terrorism sends a dangerous message to the global community, exposes funding agencies and donors to reputational risks, and makes a mockery of global values. While the concern that fungible inflows from international financial institutions, like IMF, could be misused for military and state sponsored cross border terrorist purposes resonated with several member countries, the IMF response is circumscribed by procedural and technical formalities. 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,” said India in a statement in May.