by Rama Rao Malladi*
IMF’s lack of accountability and China’s muscle flexing with its over 6% voting share were on display on Friday, May 9 as Pakistan walked away with another dose of loan disbursals amounting to $ 2 billion plus.
India, with less than half of China’s IMF shareholding, protested stiffly and abstained from voting. IMF rules do not permit a formal “no” vote.
Officially, the IMF has taken an interesting stand.
It ducked issues related to Pakistan’s terror funding record, and calls to further aid to the failed state.
It took cover under procedural and technical formalities, contending that the staff-level agreement, a pre-requisite for any bail out, was reached between the IMF and Pakistan government before April 22 massacre at Pahalgam by Pak Army’s proxy jihadi squad, and India’s Op Sindhoor.
This IMF reasoning is true to the criticism that it lacks accountability and that it does not care about the reputation of its borrowers. Over time, the IMF stands accused of being fixated on the conditions of its loans.
Expectedly, Pakistan feels relieved. Prime Minister Muhammad Shehbaz Sharif expresses satisfaction over the IMF approval,” his office said in a statement.
The latest approval is two -fold.
One of $ 1 billion under the Extended Fund Facility (EFF).
Two of $ 1.3 billion fresh Resilience and Sustainability Facility (RSF).
With this the total disbursements out of the $7 billion bailout approved last year goes up to $2 billion.
Indian representative at the IMF Board voiced strong concerns over Pakistan’s history with IMF loans and pointed out to the danger of Pakistan misusing the latest aid for military and state sponsored cross border terrorism.
And added that the approval amounts to rewarding continued sponsorship of cross-border terrorism. It sends a dangerous message to the global community, exposes funding agencies and donors to reputational risks, and makes a mockery of global values.
Also, India questioned the effectiveness of past IMF programs for Pakistan and highlighted its military-linked businesses as the largest conglomerate in Pakistan.
In the run up to the Friday meeting, not only India, but also American strategic and economic egg-heads like Michael Rubin asked the IMF to stop bailing out Pakistan.
Their contention: Islamabad has been diverting the IMF-World Bank aid towards terror financing since terrorism is a tool of its Army-driven foreign policy,
In their assessment, “Cutting off aid may precipitate a crisis in the short term, but it is the only way to get Pakistan to accept accountability in the long term.”
If it cuts off terror support or even dissolves the Inter-Services Intelligence agency (ISI) of the Army, “Pakistan could fund more essential services”.
Well, the assessment is loud and clear: Pakistan is a rogue nation. It does not deserve a handout, more so because it is amongst the most corrupt nations.
This argument is seconded by an interesting analogy popped up by Michael Rubin, Senior Fellow at the American Enterprise Institute, (AEI).
“When an alcoholic uses donations to buy hard liquor, the answer is not to up his allowance rather it is to cut him off.”
Now why American experts are opposed to new IMF loans to Pakistan.
“It is time for tough love”, Michael Rubin wrote in the Washington Examiner on May 7, terming the Pahalgam massacre as Pakistan’s attempt to replicate via its terrorist proxies Hamas’s October 2023 attack on Israel.
He was very blunt in castigating the nation carved out of British India in 1947.
“To this day, Islamabad protects the masterminds of the 2008 Mumbai at attack. Nor have Pakistani authorities ever explained how was the al Qaeda founder Osama bin Laden came to be in Abbottabad, Pakistan’s equivalent of West Point, at a time he was wanted for the slaughter of thousands of Americans”, Rubin said
In the Mumbai attack, Pakistan-trained and sponsored groups attacked multiple sites, gunning down civilians and tourists, including Americans, he pointed out.
The AEI egg-head finds powerful weapon in Taliban to beat Pakistan.
Recalling that the ISI had trained and armed the Taliban, he observed thus: “The blood of hundreds if not thousands of American servicemen is on the hands of the Taliban’s Pakistani handlers.”
“Money is fungible, and every dollar the IMF provides Pakistan is a dollar Pakistani authorities can divert to terror groups,”, he concludes his arguments.
Taunting President Donald Trump, Michael Rubin said, “To continue to allow billions of dollars in IMF grants and loans to a terror-sponsoring regime with the blood of Americans, Indians, and many others on its hands is perverse”.
Pakistan, he said, is “laughing at Trump and playing both Washington and the IMF for fools.”
Pakistan’s overstretched economy has been surviving on bail outs.
Between last July-August and this March, IMF had sanctioned $8.3 billion to avert Pakistan’s bankruptcy under various heads.
Islamabad is experiencing a severe cash crunch. It is also debt ridden; external debt alone has crossed $131 billion mark.
It cannot afford any choking of funds flow in the wake of reverses suffered under Op Sindhoor, which was New Delhi’s response to Pahalgam April 22 massacre.
As the countdown for the IMF board meeting began, Pakistan found itself in an awkward position.
A social media post has sought urgent financial assistance from international lenders, citing Pakistan’s economic losses amid soaring tensions with India.
Pakistan’s Ministry of economic affairs quickly denied the post, claiming their account had been hacked.
(*Rama Rao Malladi is a Delhi-based senior journalist and avowed watcher of subcontinental political and economic currents)
