India Raises Alarm Over IMF Loans to Pakistan, Flags Risk of Terror Financing, Economic Misuse [READ OFFICIAL REPORT]

In a significant diplomatic development, India raised serious concerns at the International Monetary Fund (IMF)regarding the approval of two new loan programs for Pakistan—an Extended Fund Facility (EFF) of $1 billion and a Resilience and Sustainability Facility (RSF) worth $1.3 billion.

India flagged Pakistan’s long history of IMF bailouts, poor economic governance, and the high risk of misusing international funds to finance cross-border terrorism. Citing a lack of sustained reform and weak program implementation, Indian officials questioned the efficacy and monitoring mechanisms of IMF lending, especially in the context of Pakistan’s repeated defaults and military interference in economic affairs.

Why India Is Worried About IMF Loans to Pakistan?

India highlighted that Pakistan has received IMF disbursements in 28 of the past 35 years, with four separate IMF programs since 2019 alone. “If previous IMF programs had been successful, Pakistan wouldn’t need yet another bailout,” India pointed out during the review session.

India also expressed concern over the military’s dominant role in Pakistan’s economy and governance, stating that it undermines civilian reform and policy implementation. A 2021 United Nations report had labeled military-linked businesses in Pakistan as “the largest conglomerate in the country.”

Cross-Border Terrorism & Global Risks

More alarmingly, India warned that fungible IMF funds could be diverted to support military operations and state-sponsored terrorism. Such actions, it said, pose a reputational risk for global financial institutions and make a mockery of international commitments to peace and accountability.

“Rewarding a nation repeatedly accused of sponsoring terrorism sends a dangerous global message,” India stated, emphasizing the need for moral responsibility in IMF’s funding decisions.

IMF’s Response and India’s Abstention

While India’s concerns resonated with several member countries, the IMF response was “circumscribed by procedural and technical formalities.” Nonetheless, the Fund took note of India’s objections, and India formally abstained from voting on the loan approval.

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