Why Delhi couldn't stop the IMF's rescue to Islamabad

Last week, the International Monetary Fund (IMF) approved the rescue of $ 1 billion (£ 756 million) to Pakistan-Rid, which attracted a sharp disapproval of India as military war Termination of Fire, led by the United States It was unexpectedly announced.

Despite India's protests, the IMF Council approved the second $ 7 billion loan installment, saying that Islamabad demonstrated a strong implementation of the program, leading to a continued economic recovery in Pakistan.

He also said the Fund will continue to support Pakistan's efforts to build economic resistance to “climate vulnerabilities and natural disasters”, providing additional access to about $ 1.4 billion in the future.

In a highly formulated statement India expressed concerns about the decision, citing two reasons.

Delhi questioned the “efficiency” of such rescue means or the lack of such, given Pakistan's “bad experience” in the implementation of reform measures. But more importantly, he noted the possibility of using these funds for “state-sponsored cross-country terrorism” -Burrent Islamabad repeatedly denied that the IMF was also exposed to “reputation risks” and made a “mockery of global values”.

The IMF did not respond to the BBC's request for a comment on the Indian position.

Even Pakistani experts say there is some credit to Delhi's first dispute. Pakistan is predisposed to the constant search for the IMF's assistance – it has been obtained 24 times since 1958 – without making significant reforms to improve public government.

“Going to the IMF is like going to the intensive care ward (intensive treatment ward). If the patient goes 24 or 25 times in ICO, then there are structural challenges and concerns that need to be considered,” Hussein Hakan, a former Pakistani ambassador to the US, to the BBC.

But addressing the other concerns of Delhi-Che IMF “rewards prolonged sponsorship of cross-border terrorism”, thus sending a “dangerous message to the global community”-is far more complicated and may explain why India is not able to put pressure to stop rescue.

India's decision to try to prevent the next tranche from rescuing to Islamabad was more optics rather than a desire for some tangible result, experts say. According to the country's own observations, the fund had a limited ability to do something for the loan and was “limited by procedural and technical formalities”.

As one of the 25 members of the IMF Council, the influence of India in the Fund is limited. It is a group of four countries, including Sri Lanka, Bangladesh and Bhutan. Pakistan is part of the Central Asia group represented by Iran.

Unlike the United Nations organization system for a state vote, the voice rights of the IMF Council members are based on the economic size of the country and its contributions-system, which is increasingly confronted with criticism of favorable western countries over developing economies.

For example, the US has the largest share of voting – at 16.49% – while India has only 2.6%. In addition, the IMF rules do not allow a vote against a proposal – Council members can vote in favor or refrain – and decisions are taken by consensus of the Council.

“This shows how the interests of powerful countries can influence decisions,” said an economist, who does not want to talk to the recording to the BBC.

Considering this imbalance was a key proposal in reforms glued to the IMF and other multilateral creditors during the Presidency of the D -20 in India in 2023.

In their report, former Indian bureaucrat NK Singh and former US Finance Minister Lawrence Summers recommended that the IMF's right to vote and financial contributions be interrupted in order to secure a more just representation for both the Global North and the Global South. But so far there has been no progress in implementing these recommendations.

In addition, the latest changes to the IMF's own rules on financing the parties in conflict add more complexity to the issue. A loan of $ 15.6 billion from the Ukraine Fund in 2023. Of its kind from IMF to State to War.

“He leaned his own rules to give a huge lending package to Ukraine – which means he could not use this apology to close the already settled loan of Pakistan,” said Mihir Sharma of The BBC of the Observer Research Foundation (ORF) in Delhi.

If India really wants to handle its complaints, the right forum to present them will be the UN FATF (a special financial action group), says G -H Haqqani.

FATF looks at the problems of combating terror financing and decides whether the parties should be placed in gray or black lists that prevent them from accessing funds from authorities such as the IMF or the World Bank.

“The grandiose in the IMF cannot and does not work,” said H -Hhakani. “If a country is on this list (FATF), it will face challenges in receiving a loan from the IMF – as it happened to Pakistan earlier.”

While things are, however, Pakistan was officially removed from the list of the Special Financial Action Group (FATF) in 2022.

Separately, experts also warn that India's calls to process the IMF financing processes and veto powers can be a two -edged sword.

Such reforms “would inevitably give Beijing (not Delhi) more power,” said G -N Sharma.

Haqqani agrees. India should be careful to use “bilateral disputes in multilateral forums,” he said, adding that India was historically at the end of receiving China from China in such places.

He points out cases of Beijing blocking loans ADB (Asian Development Bank) sought by India for the northeastern state of Arunarul Pradesh, citing border disputes between the two countries in the region.

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