New Delhi: Amid rising cross-border tensions, the Indian government on Friday raised serious concerns with the International Monetary Fund (IMF) over its continued financial support to Pakistan. However, despite strong objections, IMF approved the immediate disbursement of about USD 1 billion to Pakistan under the ongoing Extended Fund Facility.
Apart from this, the IMF Executive Board approved a USD 1.4 billion arrangement under the Resilience and Sustainability Facility (RSF), reportedly to bolster Pakistan's resilience to natural disasters and to enhance budget and investment planning to promote climate adaptation.
IMF Board approved the first review of Pakistan’s economic reform program under the EFF, enabling a disbursement of ~ $1 billion, reflecting strong program implementation which has contributed to continuing economic recovery. https://t.co/7qqa7ZTBHA pic.twitter.com/EEyiLgcSvq
— IMF (@IMFNews) May 9, 2025
India, on the other hand, highlighted the risk of misuse of debt for state sponsored cross-border terrorism and questioned the efficary of IMF lending programs citing Pakistan's poor track.
Criticising the funding, chief minister of Jammu & Kashmir Omar Abdullah expressed apprehensions that tensions will only escalate after this.
I’m not sure how the “International Community” thinks the current tension in the subcontinent will be de-escalated when the IMF essentially reimburses Pakistan for all the ordnance it is using to devastate Poonch, Rajouri, Uri, Tangdhar & so many other places.
— Omar Abdullah (@OmarAbdullah) May 10, 2025
Flagging concerns over effectiveness of IMF programs and also on the possibility of misuse of debt financing funds by Pakistan for state sponsored cross border terrorism, India had urged the global financial body to ensure stricter oversight and accountability.
"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. 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," stated Ministry of Finance in a release.
"Pakistan military’s deeply entrenched interference in economic affairs poses significant risks of policy slippages and reversal of reforms. Even when a civilian government is in power now, the army continues to play an outsized role in domestic politics and extends its tentacles deep into the economy. In fact, a 2021 UN report described military-linked businesses as the “largest conglomerate in Pakistan”. The situation has not changed for the better; rather the Pakistan Army now plays a leading role in the Special Investment Facilitation Council of Pakistan," it added.
India flagged the Pakistan chapter of the IMF Report on Evaluation of Prolonged Use of IMF Resources. The report noted that there was a widespread perception that political considerations have an important role to play in the IMF lending to Pakistan. As a result of repeated bailouts, Pakistan’s debt burden is very high, which paradoxically makes it a too big to fail debtor for the IMF.
As per the Ministry, India further 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.
Also Read
Pakistan Using Civil Airlines As A Shield: Wing Commander Vyomika Singh
