New Delhi: Nearly three weeks after the deadly terror attack in Pahalgam that killed 26 people on 22 April, India has sharply criticised the International Monetary Fund (IMF) for its continued financial support to Pakistan, warning that such funds may be misused for state-sponsored terrorism.
At a review meeting held by the IMF on 9 May where it discussed a $1 billion Extended Fund Facility (EFF) and a new $1.3 billion Resilience and Sustainability Facility (RSF) for Pakistan, India abstained from voting, questioning the credibility and effectiveness of IMF’s repeated bailouts to the Islamabad.
India’s delegation called out Pakistan’s “poor track record” of adhering to IMF conditions, pointing out that in the 35 years since 1989, Pakistan has received IMF disbursements in 28 of those years and has already had four lending programs in the past five years alone.
“Had the previous programs succeeded,” India argued, “Pakistan would not be seeking yet another bailout”.
The criticism comes against the backdrop of mounting security concerns. The 22 April deadly Pahalgam terror attack shook the nation and India’s subsequent military response through Operation Sindoor was followed by Pakistani airstrikes targeting civilian areas across the border.
Here, it should be noted that India raised concerns that fungible financial support from institutions like the IMF could be diverted to fund military operations or cross-border terrorism.
It cited a 2021 United Nations report that called Pakistan’s military-linked businesses the “largest conglomerate in Pakistan,” pointing out that the army continues to dominate both economic and political systems despite a civilian government being in power.
Referring to the IMF’s own internal evaluation on prolonged use of resources, India highlighted a “widespread perception” that political considerations influence lending to Pakistan.
Repeated bailouts, India said, have turned Pakistan into a “too big to fail” debtor, creating dangerous moral hazards for the global financial system.
“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,” Ministry of Finance.
The IMF, however, acknowledged India’s concerns and noted its abstention from the vote.
