Shillong, May 10: The International Monetary Fund (IMF) on May 9 reviewed its ongoing $1 billion Extended Fund Facility (EFF) lending program for Pakistan and considered a fresh $1.3 billion Resilience and Sustainability Facility (RSF) arrangement. However, the proceedings were marked by strong reservations expressed by India, which raised serious concerns about Pakistan’s poor track record with IMF programs and the potential misuse of international financial support for state-sponsored cross-border terrorism.
Citing Pakistan’s prolonged and repeated reliance on IMF bailouts, India questioned the effectiveness of the IMF’s lending approach in Islamabad’s case. “In the 35 years since 1989, Pakistan has received IMF disbursements in 28 years, including four separate programs in the last five years alone. If past interventions had succeeded in establishing macroeconomic stability, another bailout would not have been necessary,” India’s representative stated during the meeting.
India further highlighted the entrenched role of the Pakistan military in the country’s economic affairs, citing a 2021 United Nations report that called military-linked businesses the largest conglomerate in the country. “The military’s outsized influence continues, even under a civilian government, notably through its leadership in the Special Investment Facilitation Council,” India noted, warning that such interference threatens the continuity of reforms and increases the likelihood of policy slippages.
Pointing to the IMF’s own Evaluation Report on Prolonged Use of Resources, India flagged perceptions of politically motivated lending to Pakistan. It warned that repeated bailouts have turned Pakistan into a “too big to fail” debtor, placing an undue burden on the Fund and raising reputational risks for donor countries.
India also issued a pointed warning about the fungibility of IMF funds and the danger that such inflows could be diverted to support military activities or cross-border terrorism. “Rewarding continued sponsorship of terrorism sends a dangerous message to the global community and undermines the credibility of global financial institutions,” the Indian delegation said.
While India’s concerns found resonance with several other member countries, the IMF response remained limited to procedural and technical observations. India abstained from the vote on the fresh RSF lending proposal, and the IMF acknowledged the issues raised during the meeting.
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