India abstained from voting on the International Monetary Fund’s proposed $2.3 billion bailout package for Pakistan, citing Islamabad’s “poor track record” in effectively utilizing previous financial aid.
At the IMF board meeting held on May 9 in Washington, India flagged concerns over Pakistan’s repeated failure to meet conditions attached to IMF assistance.
“The International Monetary Fund (IMF) today reviewed the Extended Fund Facility (EFF) lending program ($1 billion) and also considered a fresh Resilience and Sustainability Facility (RSF) lending program ($1.3 billion) for Pakistan,” India stated. New Delhi expressed concerns about the efficacy of IMF programs in Pakistan, given its poor track record, and the possibility of misuse of debt financing funds for state-sponsored cross-border terrorism.
India pointed out that Pakistan has been a frequent borrower from the IMF, with disbursements in 28 of the past 35 years. “Had the previous programs succeeded in putting in place a sound macroeconomic policy environment, Pakistan would not have approached the Fund for yet another bailout program,” India questioned, highlighting the country’s high debt burden.
India’s position also noted the widespread perception that political considerations have an important role to play in 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,” India emphasized.
The Indian side raised concerns about Pakistan’s military interference in economic affairs, posing 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,” India stated, citing a 2021 UN report that described military-linked businesses as the “largest conglomerate in Pakistan”.
India’s abstention signals a firm stance urging the IMF and other multilateral lenders to exercise caution in extending further financial support to Pakistan without concrete steps to end cross-border terrorism.