NEW DELHI: India on Friday abstained from voting on International Monetary Fund's (IMF) $2.3 billion loan to Pakistan and raised concerns over the efficacy of IMF programmes in case of Pakistan given its "poor track record", and also "the possibility of misuse of debt financing funds for state-sponsored cross-border terrorism."
At a board meeting on Friday, IMF reviewed the Extended Fund Facility (EFF) lending programme ($1 billion) and also considered a fresh Resilience and Sustainability Facility (RSF) lending programme of $1.3 billion for Pakistan.
Govt sources said India abstained from the vote not due to a lack of opposition but because IMF rules do not permit a formal "no" vote. They said that by abstaining, India conveyed its strong dissent within the constraints of IMF's voting system and used the opportunity to formally record its objections.
India pointed out that rewarding continued sponsorship of cross-border terrorism sends a dangerous message to global community, exposes funding agencies and donors to reputational risks, and makes a mockery of global values.
"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," according to an official statement. "This is a serious gap highlighting the urgent need to ensure moral values are given appropriate consideration in the procedures followed by global financial institutions," said the statement. It said IMF took note of India's statements and abstention from the vote.
India has urged multilateral agencies, including IMF, to have a relook at funds and loans provided to Pakistan, and also asked global anti-money laundering agency Financial Action Task Force to put Islamabad on the 'grey list'.
India Friday flagged the Pakistan chapter of the IMF Report on "Evaluation of Prolonged Use of IMF Resources." The report noted there was a widespread perception that political considerations have an important role to play in 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 IMF. India also said Pakistan has been a prolonged borrower from IMF, with a very poor track record of implementation and of adherence to IMF's programme conditions. "In the 35 years since 1989, Pakistan has had disbursements from IMF in 28 years. In the last five years, since 2019, there have been four IMF programmes. Had the previous programmes succeeded in putting in place a sound macroeconomic policy environment, Pakistan would not have approached the Fund for yet another bailout programme," said the statement.
New Delhi pointed out that such a track record calls into question either effectiveness of IMF programme designs in case of Pakistan or their monitoring or implementation by Pakistan. India also said Pakistan military's deeply entrenched interference in economic affairs poses significant risks of policy slippages and reversal of reforms. Even when a civilian govt is in power now, the army continues to play an outsized role in domestic politics and extends its tentacles deep into the economy, it said.
At a board meeting on Friday, IMF reviewed the Extended Fund Facility (EFF) lending programme ($1 billion) and also considered a fresh Resilience and Sustainability Facility (RSF) lending programme of $1.3 billion for Pakistan.
Govt sources said India abstained from the vote not due to a lack of opposition but because IMF rules do not permit a formal "no" vote. They said that by abstaining, India conveyed its strong dissent within the constraints of IMF's voting system and used the opportunity to formally record its objections.
India pointed out that rewarding continued sponsorship of cross-border terrorism sends a dangerous message to global community, exposes funding agencies and donors to reputational risks, and makes a mockery of global values.
"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," according to an official statement. "This is a serious gap highlighting the urgent need to ensure moral values are given appropriate consideration in the procedures followed by global financial institutions," said the statement. It said IMF took note of India's statements and abstention from the vote.
India has urged multilateral agencies, including IMF, to have a relook at funds and loans provided to Pakistan, and also asked global anti-money laundering agency Financial Action Task Force to put Islamabad on the 'grey list'.
India Friday flagged the Pakistan chapter of the IMF Report on "Evaluation of Prolonged Use of IMF Resources." The report noted there was a widespread perception that political considerations have an important role to play in 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 IMF. India also said Pakistan has been a prolonged borrower from IMF, with a very poor track record of implementation and of adherence to IMF's programme conditions. "In the 35 years since 1989, Pakistan has had disbursements from IMF in 28 years. In the last five years, since 2019, there have been four IMF programmes. Had the previous programmes succeeded in putting in place a sound macroeconomic policy environment, Pakistan would not have approached the Fund for yet another bailout programme," said the statement.
New Delhi pointed out that such a track record calls into question either effectiveness of IMF programme designs in case of Pakistan or their monitoring or implementation by Pakistan. India also said Pakistan military's deeply entrenched interference in economic affairs poses significant risks of policy slippages and reversal of reforms. Even when a civilian govt is in power now, the army continues to play an outsized role in domestic politics and extends its tentacles deep into the economy, it said.
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