IMF's Pakistan loan: When financial aid becomes ammunition across the border

Time of India

10-05-2025

The IMF's recent financial aid to Pakistan raises concerns for India, given Pakistan's history of supporting terrorism. The author criticizes the IMF for not conditioning the aid on curbing Pakistan's military spending and support for terrorist activities.
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(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com .)
The IMF Executive Board's approval on May 9 to the release of the first $1 billion of the $7 billion Extended Fund Facility for Pakistan has a dystopian air to it as far as India is concerned. To be frank, it conjures up the image of a patient in an ICU receiving a lifesaving blood transfusion while holding a pistol in his hands.From the eyes of a next door neighbour that has endured Pakistani State sponsored terrorism this is not just bad timing but also bad policy. The argument that mandates of international organisations are cast in stone, and blind to real world realities is plain wrong. From the FATF to the WHO, and from the G7 to the BRICS, political and security considerations have played central roles in decision making. While the IMF seemingly has its own timelines and inexorable logic, so do some others in Pakistan.What is apparent since the launch of " Operation Sindoor " is that among the various complex and copybook conditionalities imposed by the IMF on Pakistan, its defence spending and support to terrorism are not one of them. This is a pity. The most egregious actor in Pakistan is getting away scot-free. The Pakistan Army , the state within a state, does not countenance limits to its freedoms of action. It is leading the people of Pakistan down an abyss, leaving the civil leadership, in this case the hapless Sharif brothers, to the mercy of international creditors.The IMF approval is of course an unpleasant reminder of Pakistan's economic crisis.National power normally rides on economic power. Not in this case. Pakistan's most recent economic meltdown coincides with the beginning of Imran Khan's term as Prime Minister in 2018. Its currency today is one third the value of the Indian rupee.Many of its other indicators such as GDP, foreign exchange reserves, saving and investment rates, tax collections and debt are worse than those of Bangladesh. Pakistan is surviving on continuous IMF arrangements since 2019, and more than twenty others before that. A conflict of the kind its Army seems to be choosing with India is a death wish.Yet, Pakistan lives a charmed life. There are not many examples in the world of countries who wear their nuclear weapons on their sleeves and brandish the threat with such ease. As the days go by, despite repeated Indian assertions that the matter stood closed after the careful targeting of terror infrastructure on May 7, since there was no other intention, the Pakistan Army has raised temperatures to attract international attention.The G7 is the latest to issue a statement calling for restraint, de-escalation and dialogue. US Secretary of State Marco Rubio has separately spoken to both countries. At this point, the least helpful approach would be to repeat past mistakes of drawing an equivalence between victim and perpetrator. This has led to the same result every few years. Whether we like it or not, there is no other way but an absolutist one if terrorism worldwide has to be defeated. Kashmir or any other issue cannot be its justification.This time, the international community, including the G7 and countries such as Saudi Arabia and UAE, can make a difference by throwing the full weight of their power on Pakistan, just as has been done with other nations who have threatened peace and stability. To begin with, this is the time to issue a stern warning in private and in public to General Asim Munir to avoid any loose talk of the nuclear option and leave him in no doubt about the dire consequences that would follow.The current Chief of the Pakistan Army believes he can hold the world to ransom.Despite all the dysfunctionality in big power relations, it is very much possible for them to speak, if not act, in a single voice to stop escalation and save the people of Pakistan from the tyranny of one man's foolhardiness.Author is former Deputy National Security Advisor