Experts say IMF needs to fund process reform after multilateral institutions grant fresh loans to Pakistan

New Delhi: The International Monetary Fund (IMF) needs to reform its funding process and review the conditions for providing finance to the state, the second day after multilateral agencies approved fresh loans to Pakistan in the context of armed conflict with India.They told ET that the IMF should now analyze why frequent bailouts do not work in Pakistan and whether Islamabad should indulge the fund’s generous indulgence from time to time. Furthermore, Indian officials should strengthen engagement with IMF staff and ensure that funds provided by Pakistan do not turn to war or terrorism – a question that New Delhi has expressed.
Pronab Sen, former chairman of the National Statistical Commission, said that IMF funding is often related to conditions. Once a country meets them, fresh payments from a bailout plan are released. He expects India to continue to express opposition to the IMF funding of Pakistan.
Given the US’s main role in the IMF, “the continuation of the bailout to Pakistan will depend on how the U.S. government views Islamabad – an allies of the United States or China in the coming years.”

Review conditions

“It is time for the IMF to start reforms in the fund payment process. It must review the effectiveness of the entire condition and the bailout plan for the country,” said NR Bhanumurthy, dean of the Madras School of Economics. He added that this could be part of the reforms of the IMF and other multilateral institutions, which raised controversy during India’s 2023 presidency in 2023.
India noted to the International Monetary Fund that Pakistan has paid for the International Monetary Fund (IMF) in 28 of the 35 years since 1989. There have been four IMF programs to support it over the past five years.
The IMF board of directors met in Washington, D.C. on Friday to approve a $1 billion loan plan for extended fund facilities to Pakistan. It also cleared $1.4 billion in credit for climate resilience work.
India’s abandonment of vote at a board meeting raised concerns about the effectiveness of such bailouts and marked “abuse of funds to abuse state-owned state funds for state-sponsored cross-border terrorism”.

There is no provision for opposing the IMF proposal. A country can vote for or abstain.

India stressed that if the previous plan successfully established a reasonable macroeconomic policy environment, then Pakistan would not provide another bailout for the fund. New Delhi also highlighted the “super-large” role of the Pakistani army in economic affairs there.