The International Monetary Fund (IMF) on Friday reviewed the Extended Fund Facility (EFF) lending program ($1 billion) and also considered a fresh Resilience and Sustainability Facility (RSF) lending program ($1.4 billion) for Pakistan. This is part of $7 billion aid package, which was approved in September 2024. The 37-month EFF program includes six scheduled reviews over the course of the bailout. India, as a member nation, abstained from voting at the IMF against Pakistan’s bailout package.
India abstained from vote against IMF loan to Pakistan: Explained
The IMF Executive Board, which has 25 directors who represent member countries, are responsible for operations at the institution, including the approval of loans. According to government sources cited by DD News, the IMF takes decisions based on consensus, unlike in the United Nations, where each country has one vote. It is to be noted that the vote share in the IMF reflects the economic size of each member.
India abstained from the vote because the voting system does not allow for a formal “no” vote. The members can only vote “yes” or abstain. There is no provision to vote against a loan or proposal. India used abstention to formally record its dissent.
It is to be noted that the United States holds the largest voting share at the IMF, with 16%, and given that Pakistan received funds from the institution, it can be inferred that the US either supported or did not oppose the decision. Other key IMF shareholders include Japan with 6.14%, China at 6.08%, Germany at 5.31%, France and the UK at 4.03% each, Italy at 4.12%, Canada at 3.37%, India at 3.05%, and Russia at 2.68%.
Key concerns raised by India at IMF
1- India raised concerns over the loans given to Pakistan, given its “poor track record”. It argued that if past programs had been effective, another bailout wouldn’t be needed, implying that there was either the IMF’s program for Pakistan had flaws, or there is weak monitoring of funds, or Pakistan failed to implement promised reforms.
Since 1989, Pakistan has had disbursements from the IMF in 28 years. In the last 5 years, since 2019, there have been 4 IMF programs.
2- It also highlighted that Pakistan can misuse the funds released by the IMF to fund state-sponsored cross-border terrorism.
3- India also flagged the Pakistan chapter of the IMF Report on Evaluation of Prolonged Use of IMF Resources, which noted a widespread perception that political factors influence IMF lending to Pakistan. “Pakistan’s debt burden is very high, which paradoxically makes it a too big to fail debtor for the IMF,” said the Ministry of Finance in a statement.
4- A 2021 UN report identified military-linked businesses as the largest conglomerate in Pakistan, and this remains unchanged to date. In fact, the Pakistan Army now holds a prominent role in the country’s Special Investment Facilitation Council, further entrenching its influence in the economy, India stated.
5- India also said that the IMF’s continuous loans to Pakistan to “sponsor cross-border terrorism” sends a wrong message to the world and makes a “mockery of global values”.
The statement added, “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.”
“I’m sure our Executive Director will put forward India’s position,” India’s Foreign Secretary Vikram Misri told reporters at a media briefing on Thursday.
He added, “Many of the 24 IMF bailout packages given to Pakistan never reached a successful conclusion… the case about Pakistan should be self-evident to those who generously open their pockets.”
Congress slams Centre over IMF
“On April 29th, the INC had demanded that India vote against the IMF loan to Pakistan, which was considered today by its Executive Board. India has only abstained from the vote. The Modi Government has chickened out. A strong NO would have sent a powerful signal,” said Jairam Ramesh, Rajya Sabha MP from Congress.
Congress spokesperson Pawan Khera said, “The Modi govt was expected to not only vote against but also to lobby with other members to oppose fresh IMF loans to Pakistan.”