IMF Reviews $2.3B Loan To Pakistan;India Flags Terror Financing
International Monetary Fund (IMF) reviewed the Extended Fund Facility (EFF) lending program of worth $1 billion and also considered a fresh Resilience and Sustainability Facility (RSF) lending program of $1.3 billion for Pakistan today. India has abstained from voting on the IMF’s $1.3 billion bailout package for Pakistan.
India has taken its stand in front of the IMF against Pakistan, flagging the use of IMF programs in terror financing. As an active and responsible member country, India raised concerns over the efficacy of the IMF program for Pakistan, given its poor track record and the possibility of misusing the debt financing to fund state-sponsored cross-border terrorism.
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India raised the Pakistan chapter of the IMF Report on the evaluation of prolonged use of IMF resources. As per the IMF report, there was 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.
Pakistan has been a prolonged borrower from the IMF, with a very poor track record of implementation and adherence to the IMF’s program conditions. In the 35 years since 1989, Pakistan has had disbursements from the IMF in 28 years.
In the last 5 years since 2019, there have been 4 IMF programs. Had the previous programs succeeded in putting in place a sound macro-economic policy environment, Pakistan would not have approached the Fund for yet another bail-out program.
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India pointed out that such a track record calls into question either the effectiveness of the IMF program designs in case of Pakistan, or their monitoring, or their implementation by Pakistan.
Pakistan military’s deeply entrenched interference in economic affairs poses significant risks of policy slippages and reversal of reforms. 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.
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.
