New Delhi: India has been unable to dissuaded the Asian Development Bank (ADB) from approving a US$ 800 million bailout package for Pakistan. India suspects that the funds – or at least part of it – will be used by Pakistan for terror funding.
This development comes a month after Pakistan secured a US$1 billion (around Rs 8,500 crore) package from the International Monetary Fund (IMF).
The ADB package, approved to improve public financial management, includes a US$ 300 million policy-based loan, and a US$ 500 million programme-based guarantee, official said.
Following the Pahalgam terror attack in Jammu and Kashmir on April 22 that resulted in the targeted killings of 26 people, mostly tourists from across the country, India has been approaching several global lending bodies to expose Pakistan’s support for terrorism and urge them to pause future loan packages.
Government sources told India Today that India had firmly objected to the ADB offering any financial aid to Pakistan, citing serious concerns about misuse. India also highlighted Pakistan’s economic fragility, with tax revenue dropping significantly from 13% of GDP in 2018 to just 9.2% in 2023 and the rise in its defence spending.
India fears that loans from ADB and other international lenders might be diverted toward military expenses instead of development. In its submission, India pointed out that Pakistan has repeatedly failed to implement key economic reforms, even after multiple loan programs from the ADB and the IMF.
India also highlighted Pakistan’s weak governance and the outsized role of its military in economic affairs. India pointed out that the military’s influence remains strong, especially through the Special Investment Facilitation Council.
The council was set up in June 2023 to promote and facilitate investment, particularly foreign direct investment.
India also expressed deep concerns over Pakistan’s support for cross-border terrorism and its failure to act on key mandates of the Financial Action Task Force (FATF), including freezing assets of UN-designated terrorist groups. India underlined that these issues not only threaten regional peace but also increase the ADB’s risk exposure.
India is also likely to actively pursue the FATF to get Pakistan back onto its ‘grey list’, which will increase scrutiny on its financial transactions.
