India opposes ADB fund support to Pakistan
New Delhi: India has asked the Asian Development Bank (ADB) to curb the fund flow to Pakistan, expressing concern over the possibility of misuse of resources, particularly against the backdrop of Islamabad's increasing defence spending, said senior officials.
The move comes after ADB on Tuesday approved an $800-million programme "to strengthen fiscal sustainability and improve public financial management in Pakistan".
India also questioned the efficacy of multilateral bodies such as the ADB and the International Monetary Fund (IMF) funding Pakistan.
"India expects the ADB to closely monitor the implementation of the policy matrix and to adequately ring-fence financing to prevent any such misuse," said an official who did not wish to be identified.
Last month, India had opposed the IMF's debt support to Pakistan amid Operation Sindoor. The IMF board, which met in Washington DC on May 9, approved an extended fund facility lending programme of $1 billion to Pakistan. It also cleared a $1.4 billion credit line for climate resilience efforts.
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India had then raised concerns over the "possibility of misuse of funds for state-sponsored cross-border terrorism".
India is also planning to push for Pakistan's inclusion in the grey list of the Financial Action Task Force (FATF), highlighting the latter's failure to comply with the organisation's anti-money laundering and terror-financing rules.
Bailouts & high defence spend
India has highlighted that the share of Pakistan's tax collection in its gross domestic product (GDP) fell to 9.2% in 2022-23 from 13% in 2017-18 and continues to remain way lower than the Asia and Pacific average of about 19%. However, there has been a substantial increase in Pakistan's defence spending during this period.
"This points to the possibility of diversion of funds made available to the country by the external agencies... especially those that are made available by fungible debt financing," said the official cited earlier.
India has pointed out that had the previous bailout programmes, funded by both the ADB and the IMF, succeeded in putting in place a sound macroeconomic policy environment, Pakistan would not have approached the IMF for the 24th bailout programme.
"Pakistan's poor track record of implementation stems from the military's deeply entrenched interference in economic affairs, posing risks of policy slippages and reversal of reforms as has been witnessed in the past," India told the ADB.
Pakistan's support to cross-border terrorism has exacerbated the security situation in the entire region and has significantly escalated macroeconomic risks within Pakistan, India said, adding that this also heightens enterprise risks for the ADB.
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