The International Monetary Fund (IMF) on Friday reviewed Pakistan’s $1 billion Extended Fund Facility (EFF) program and considered a new $1.3 billion Resilience and Sustainability Facility (RSF) loan. India, an active IMF member, raised concerns about the effectiveness of IMF bailouts to Pakistan, highlighting the country’s poor track record and risks of debt misuse.
Questioning effectiveness
India pointed out that Pakistan has been a frequent borrower from the IMF, with disbursements in 28 of the past 35 years. “In the last five years alone, there have been four IMF programs. Had the previous programs succeeded, Pakistan would not have needed yet another bailout,” India stated, questioning whether the fault lies in “the effectiveness of the IMF program designs, their monitoring, or their implementation by Pakistan.”
Military’s economic grip
India emphasised that Pakistan’s military remains deeply involved in the country’s economic affairs, posing risks to reform efforts. “Even with a civilian government in power, the army continues to play an outsized role in domestic politics and extends its tentacles deep into the economy,” India said, citing a 2021 UN report that described military-linked businesses as Pakistan’s “largest conglomerate.”
Political considerations at play
India also flagged findings from the IMF’s own Evaluation Report, which noted perceptions that “political considerations have an important role to play in IMF lending to Pakistan.” India warned that repeated bailouts have left Pakistan with a dangerously high debt burden, making it a “too big to fail debtor for the IMF.”
Concerns over terrorism funding
India voiced strong objections to the potential misuse of IMF funds, stressing that “rewarding continued sponsorship of cross-border terrorism sends a dangerous message to the global community.” India cautioned that such funding risks “exposing agencies and donors to reputational harm” and “makes a mockery of global values.”
Call for reform
India called on the IMF and other international institutions to ensure moral values are better integrated into lending decisions. “The concern that fungible inflows could be misused for military and terrorist purposes resonated with several member countries,” India noted, but added that the IMF’s response remains “circumscribed by procedural and technical formalities.”
The IMF acknowledged India’s concerns and noted its abstention from the vote on the new program for Pakistan.
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