New Delhi; Pakistan has now got US$ 1 illion to spend on developing terror infrastructure that will not only strike India, but targets across the world. That is how India views an approval of funds to Pakistan by the International Monetary Fund (IMF) under the ongoing Extended Fund Facility. This disbursement decision came on Friday, despite India’s objections.
In a statement, the Washington-based global lender has said its Executive Board concluded the initial review of Pakistan’s economic reform programme under the Extended Fund Facility (EFF) arrangement.
“This decision allows for an immediate disbursement of around USD 1 billion (SDR 760 million), bringing total disbursements under the arrangement to about USD 2.1 billion (SDR 1.52 billion),” the IMF has stated.
In addition, the IMF Executive Board approved the authorities’ request for an arrangement under the Resilience and Sustainability Facility (RSF), with access of about $1.4 billion (SDR 1 billion).
The IMF said in a statement that Pakistan’s 37-month EFF was approved on September 25, 2024, and “aims to build resilience and enable sustainable growth”, with priorities including entrenching macroeconomic sustainability.
It said the RSF will support Pakistan’s efforts to reduce vulnerabilities to natural disasters and to build economic and climate resilience.
Following the Executive Board discussion, Deputy Managing Director and Chair Nigel Clarke said risks to the outlook remain elevated, “particularly from global economic policy uncertainty, rising geopolitical tensions, and persistent domestic vulnerabilities”.
India has raised concerns over the efficacy of IMF programmes in the case of Pakistan, given its poor track record, and also on the possibility of misuse of debt financing funds for state-sponsored cross-border terrorism. On Friday, India abstained from voting in favour of disbursement of funds to Pakistan.
New Delhi also opposed the IMF’s proposal to extend fresh loans of $2.3 billion to Pakistan, saying they could be misused for financing state-sponsored cross-border terrorism.
This comes at a time when India and Pakistan are engaged in a conflict, following the massacre of 26 persons, mostly tourists, at Pahalgam in Jammu and Kashmir on April 22. Investigations have unearthed Pakistan’s footprints. India reacted by carrying out high-precision missile strikes against nine terror locations in Pakistan and Pakistan-Occupied Jammu and Kashmir (PoJK) on May 7.
Pakistan has violated the ceasefire agreement along the Line of Control (LOC) and launched unsuccessful missile and drone attacks against India since then.
India pointed out to the IMF 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, the country’s finance ministry said in a statement.
“While the concern that fungible inflows from international financial institutions, like the IMF, could be misused for military and state-sponsored cross-border terrorist purposes resonated with several member countries, the IMF’s response is circumscribed by procedural and technical formalities. This 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,” the ministry said.
It further said that the Pakistan military’s deeply entrenched interference in economic affairs poses significant risks of policy slippages and reversal of reforms.
“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,” it noted.
Meanwhile, a statement issued by Pakistan said: “Prime Minister Shehbaz Sharif expressed satisfaction over the approval of a USD 1bn dollar instalment for Pakistan by the IMF and the failure of India’s high-handed tactics against it.”
“Pakistan’s “economic situation has improved, and the country is moving towards development. India is plotting a conspiracy to divert attention from our country’s development through unilateral aggression”, it said.
“Indian attempts to sabotage the IMF programme have failed,” the statement said, adding that the IMF programme would help stabilise Pakistan’s economy and put it on the path towards long-term recovery. We are working on priority areas such as tax reform, improved energy sector performance and private sector development. The improved economic indicators in the last 14 months are a reflection of the government’s positive policies,” the statement adds.
