CURRENT NEWS
India was right! Pakistan misses IMF loans conditions again
WHAT?
India's Stand Vindicated as Pakistan Misses IMF Loan Conditions Again.Pakistan has failed to meet three out of five key targets set by the International Monetary Fund (IMF) for the second review of its $7 billion bailout package, reinforcing India's long-standing concerns about Islamabad's poor track record in implementing IMF reforms and the potential misuse of funds. This development highlights persistent structural and fiscal weaknesses in Pakistan's economy, including revenue shortfalls and unchecked unorganized sectors.
Key Failures in Meeting IMF Targets
Pakistan's performance under the 37-month Extended Fund Facility (EFF), approved by the IMF in September 2024 for SDR 5,320 million (approximately $7 billion) with an initial disbursement of $1 billion, has been underwhelming due to many reasons.
- Revenue Collection Shortfall: The Federal Board of Revenue (FBR) missed its target by failing to collect Rs 12.3 lakh crore in total revenues.
- Tajir Dost Scheme Flop: This initiative, aimed at taxing retailers, generated only Rs 50 billion instead of the expected amount, described as a "dud" that left the unorganized economy largely unchecked.
- Provincial Savings Deficit: Provinces fell short of saving Rs 1.2 lakh crore in the fiscal year ending June 2025, due to higher-than-expected expenditures.
- These misses were reported in Pakistan's Express Tribune and confirmed by the Ministry of Finance's fiscal operations summary.
INDIA'S STAND
- India has consistently opposed IMF loans to Pakistan, arguing that such funds could be diverted for military purposes or state-sponsored cross-border terrorism.
- India points to Pakistan's history as a "prolonged borrower" from the IMF, with disbursements in 28 of the 35 years since 1989 and four programs since 2019.
- Had previous programs succeeded, Pakistan would not need repeated bailouts, questioning the IMF's program design, monitoring, or Pakistan's implementation.
- Pakistan's army exerts outsized influence on the economy, with military-linked businesses described in a 2021 UN report as the "largest conglomerate in Pakistan." The army leads the Special Investment Facilitation Council, risking policy reversals.
- The IMF's report on Prolonged Use of Resources notes widespread perceptions of political considerations in lending to Pakistan, leading to high debt and a "too-big-to-fail" status.
While the IMF has noted some progress in macroeconomic stability (e.g., falling inflation and rising reserves as of April 2025), ongoing risks from fiscal slippages persist. India's abstention from earlier IMF votes (e.g., in May 2025) and calls for reforms in global institutions reflect concerns that rewarding such behavior exposes donors to reputational risks and undermines global values.
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