India flags terror funding risk as IMF approves USD 1 billion loan for Pakistan
India has raised concerns over the recent $1 billion IMF loan to Pakistan, warning of potential misuse for state-sponsored cross-border terrorism. India highlighted Pakistan's poor track record with IMF programs and abstained from voting at the crucial IMF board meeting.
India has raised concerns over the potential misuse of an International Monetary Fund (IMF) loan to Pakistan, warning that the funds could be diverted for state-sponsored cross-border terrorism. The IMF on Friday approved the immediate disbursement of approximately USD 1 billion to Pakistan under the ongoing Extended Fund Facility (EFF) program. The decision followed the Washington-based lender’s review of Pakistan’s economic reform progress, bringing total disbursements under the EFF arrangement to about USD 2.1 billion.
In a post on the social media platform X, India’s Ministry of Information and Broadcasting said it had expressed concerns about the effectiveness of IMF programs in Pakistan, citing Islamabad’s "poor track record" in implementing economic reforms and adhering to program conditions.
"As an active and responsible member country, India raised concerns over the efficacy of IMF programs 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," the ministry said.
India’s protest came during the IMF Executive Board meeting that approved the fresh disbursement, with New Delhi abstaining from voting. The finance ministry further noted that extending financial support to Pakistan despite its continued involvement in cross-border terrorism sends a "dangerous message" to the global community and exposes funding agencies to reputational risks.
IMF's ongoing support to Pakistan
The IMF’s approval marks the first installment under the current three-year, USD 7 billion EFF arrangement, which was originally agreed upon in July last year. The program aims to stabilize Pakistan’s struggling economy through structural reforms, including tax policy adjustments, energy sector reforms, and measures to improve private sector growth.
However, India has repeatedly expressed concerns that the financial aid could indirectly support hostile military activities, given Pakistan’s history of using international funds to finance proxy groups involved in cross-border violence.
Escalating military tensions
India’s opposition to the IMF’s financial assistance comes amid escalating military tensions between the two nuclear-armed neighbors, with both sides reinforcing troop deployments and stepping up aerial and artillery operations along the border in recent weeks.
(With PTI inputs)