India abstained from voting on the IMF’s review of Pakistan’s USD 1 billion Extended Fund Facility (EFF) and the proposed USD 1.3 billion Resilience and Sustainability Facility (RSF), citing concerns over Pakistan’s history with previous IMF loans and the potential misuse of funds to support “state-sponsored cross-border terrorism.” 

In an official statement, India questioned the effectiveness of past IMF programs for Pakistan and raised alarm about the military’s involvement in economic affairs, stressing the risks of funding terrorism and the reputational risks it poses to global financial institutions.

“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,” the Indian ministry of finance stated, questioning “either the effectiveness of the IMF program designs in case of Pakistan or their monitoring or their implementation by Pakistan.”

India’s concerns went beyond economic issues to governance, focusing on the role of Pakistan’s military in economic matters. The statement highlighted that “Pakistan military’s deeply entrenched interference in economic affairs poses significant risks of policy slippages and reversal of reforms.”

It also cited a 2021 UN report, which described military-linked businesses as the “largest conglomerate in Pakistan,” and noted the army’s leading role in Pakistan’s Special Investment Facilitation Council.

India voices concern over IMF funds supporting terrorism

India expressed particular concern over the possibility of IMF funds being diverted to support terrorism, saying , “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 finance ministry further pointed out that while other member countries echoed India’s concerns regarding the potential misuse of international financial assistance, “the IMF response is circumscribed by procedural and technical formalities.” India described this as “a serious gap highlighting the urgent need to ensure that moral values are given appropriate consideration in the procedures followed by global financial institutions.”