India has firmly voiced its opposition to the International Monetary Fund’s (IMF) ongoing financial assistance to Pakistan, warning that the institution’s repeated economic lifelines may be inadvertently aiding a state that harbors and enables cross-border terrorism, thereby jeopardizing the credibility and ethics of the global financial system.
The IMF, in its latest review held Friday, evaluated a $1 billion tranche under the Extended Fund Facility (EFF) and deliberated a new $1.3 billion loan through the Resilience and Sustainability Facility (RSF) for Pakistan. Although India, a key stakeholder in the IMF, refrained from voting on the proposal, it expressed grave misgivings regarding Pakistan’s persistent misuse of international aid and its lack of reform.
India challenged the IMF’s continued engagement with Pakistan by highlighting the country’s habitual dependence on the Fund—having turned to it for financial support in 28 of the past 35 years. Over just the last half-decade, Pakistan has entered four separate IMF programs, which India suggested may point to either flawed policy design by the IMF, inadequate oversight, or Pakistan’s willful non-compliance with agreed reforms.
Central to India’s criticism is the dominant role of the Pakistani military in steering economic policy. Citing a 2021 United Nations report that branded the military as Pakistan’s largest economic stakeholder, India underscored that the armed forces are now prominently embedded within the Special Investment Facilitation Council. This, it argued, undermines civilian authority and increases the risk of fiscal misdirection or corruption, even when a civilian government is nominally in charge.
India further drew attention to an internal IMF assessment which highlighted a troubling trend of prolonged lending to Pakistan, raising concerns about political motivations influencing financial decisions. India warned that repeated bailouts risk creating a precedent in which Pakistan becomes a “too-big-to-fail” borrower, thereby eroding accountability, distorting financial discipline, and compromising the Fund’s legitimacy.
The most pressing concern, however, revolved around the potential misuse of IMF funds for military ends or to facilitate state-sponsored terrorism. India cautioned that continuing to provide financial support without ensuring strict safeguards would not only endanger regional peace but also undermine the moral standing of donor nations. “To reward a regime that perpetuates cross-border terrorism is to invite reputational damage and mock the very principles on which the global financial order stands,” the Indian delegation reportedly emphasized.
While several member countries acknowledged India’s concerns, the IMF responded that its ability to address such political and security implications is constrained by its mandate and operational guidelines. In light of this, India urged structural reforms within the IMF to allow ethical and security considerations to be better reflected in lending decisions.
Despite India’s objections and abstention, the IMF proceeded with its discussions on the new loan package. Due to the IMF’s weighted voting mechanism, India’s symbolic protest did not impede the proposal from advancing.