New Delhi: India on Friday opposed IMF’s proposal to extend fresh loans of USD 2.3 billion to Pakistan, saying the funds could be misused for financing state-sponsored cross-border terrorism.
New Delhi abstained from voting at the crucial International Monetary Fund meeting, whose outcome was not known till the filing of the story.
As an active and responsible member country, India raised concerns over the efficacy of IMF programmes in 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, the finance ministry said in a statement.
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India registered its protest at the board of IMF, which met on Friday to review the Extended Fund Facility (EFF) lending programme (USD 1 billion) and also considered a fresh Resilience and Sustainability Facility (RSF) lending programme (USD 1.3 billion) for Pakistan.
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, it said.
“While the concern that fungible inflows from international financial institutions, like IMF, could be misused for military and state sponsored cross-border terrorist purposes resonated with several member countries, the IMF response is circumscribed by procedural and technical formalities,” it said.
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, it said.
The IMF took note of the India’s statements and its abstention from the vote.
India’s opposition at IMF comes at a time when military conflict between India and Pakistan have intensified after a terrorist attack in Kashmir’s Pahalgam that killed 26 tourists on April 22.
Pointing out that Pakistan military’s deeply entrenched interference in economic affairs poses significant risks of policy slippages and reversal of reforms, the statement said, even when a civilian government is in power now, the army continues to play an outsized role in domestic politics and extends its tentacles deep into the economy.
“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,” it said.
Citing report on Evaluation of Prolonged Use of IMF Resources, India flagged that there was a widespread perception that political considerations have an important role to play in the IMF lending to Pakistan.
As a result of repeated bailouts, Pakistan’s debt burden is very high, which paradoxically makes it a too big to fail debtor for the IMF, it said quoting report.
