India raised objections over the poor track record of Pakistan and on the possibility of it misusing debt financing funds for state-sponsored cross-border terrorism at the International Monetary Fund (IMF) meeting on Friday on the bailout package for Islamabad, while questioning the efficacy of IMF programmes in the case of Pakistan.
Raising its objections, India abstained from voting to mark its dissent.

Advertisment

The IMF reviewed the Extended Fund Facility (EFF) lending programme ($1 billion) and also considered a fresh Resilience and Sustainability Facility (RSF) lending programme ($1.3 billion) for Pakistan, where 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.

As an active and responsible member country, India raised concerns over the efficacy of IMF programmes in the case of a bailout package for Pakistan, given its poor track record.

Also Read | Where is Jaish-e-Mohammed chief Masood Azhar? Is he hiding in an ISI safehouse?

India pointed out that Pakistan has been a borrower from the IMF since 1989, with a very poor track record of implementation and of adherence to its programme conditions.
It added that Pakistan would not have approached the IMF for yet another bailout if it had implemented the previous programmes properly.

Besides, the extensive role of the Pakistani military in economic affairs also raises serious questions, as the army continues to play an outsized role in politics and the economy even when a civilian government is in power. 

Advertisment

Also Read | Pakistan fired 300-400 drones last night to target India’s military installation: Govt

“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,” New Delhi said in a statement. 

India also flagged the Pakistan chapter of the IMF Report on Evaluation of Prolonged Use of IMF Resources, which noted that there was a widespread perception that political considerations play an important role in the IMF lending to Pakistan. 

Also Read | Indo-Pak war: Indian envoy to US schools CNN anchor over remarks on Jammu and Kashmir

Moreover, Pakistan’s debt burden is very high as a result of repeated bailouts, making it a too-big-to-fail debtor for the IMF.

There 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, India added.

Decision-making and voting procedure at IMF

Advertisment

The IMF Executive Board consists of 25 directors who represent member countries or groups of countries. It handles daily operational matters, including loan approvals.

Unlike in the United Nations, where each country has one vote, IMF voting power reflects the economic size of each member. For instance, a big economy like the United States holds a disproportionately high voting share. To simplify things, the IMF typically makes decisions by consensus.
 
In cases where a vote is required, the system does not allow a formal ‘no’ vote. Directors can either vote in favour or abstain. There is no provision to vote against a loan or proposal, hence India abstained after registering protest.

IMF approves USD 1 billion loan for Pakistan

After the voting, the IMF approved the immediate disbursement of about USD 1 billion to Pakistan under the ongoing Extended Fund Faci­li­ty, saying its economic situation has improved, as per a statement from the Pakistion PMO.

Pakistan had secured a $7 billion bailout programme from the IMF last year and was granted a new $1.3 billion climate resilience loan in March.