IMF’s $1 Billion Loan To Pakistan: Know why it was approved and why India did not say ‘no’

The International Monetary Fund (IMF) approved a USD 1 billion loan for Pakistan on Friday as part of a larger USD 7 billion Extended Fund Facility (EFF) aimed at stabilizing its crisis-hit economy. It also approved an additional USD 1.4 billion under the Resilience and Sustainability Facility(RSF), bringing the total new disbursement to USD 2.3 billion.

The decision came despite strong objections from India, which abstained from voting, citing risks of Pakistan diverting funds to finance state-sponsored cross-border terrorism.

Why India Could Only Abstain, Not Block the Loan

India’s opposition faced structural hurdles at the IMF. The lender’s rules prohibit member nations from voting “no” on loan approvals, and they can only abstain or support.

With India’s voting share in the IMF Executive Board at just 3.05% (as part of a group including Bangladesh, Bhutan, and Sri Lanka), its influence paled against larger stakeholders like the US (16.49%), China (6.08%), and Japan (6.14%).

Since the United States did not push forward any efforts to block the loan sanction, and hamstrung by rigid IMF protocols and unjust voting allocations, India was forced to register a symbolic protest through abstention.

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India’s Concerns: Terrorism and Economic Mismanagement

New Delhi highlighted Pakistan’s 28 IMF bailouts since 1989, including four since 2019, as proof of Islamabad’s economic mismanagement.

It warned that past loans failed due to Pakistan’s military interference in economic policies and repeated violations of IMF conditions. India emphasised that fresh funds risk being misused to bankroll terrorism, referencing recent attacks like the Pahalgam massacre in Jammu and Kashmir, which killed 26 innocent tourists.

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J&K CM Omar Abdullah Condemns IMF Decision

Jammu and Kashmir Chief Minister Omar Abdullah slammed the IMF, alleging the funds would finance Pakistan’s terrorist and military transgression in border regions.

“I’m not sure how the 'International Community' thinks the current tension in the subcontinent will be de-escalated when the IMF essentially reimburses Pakistan for all the ordnance it is using to devastate Poonch, Rajouri, Uri, Tangdhar & so many other places,” he stated in a post on X.