NEW DELHI— Pakistan’s failure to meet a majority of the International Monetary Fund’s (IMF) performance benchmarks in its $7 billion bailout program has reinforced India’s long-standing criticism of its neighbor’s track record with international lenders.
According to Pakistan’s Ministry of Finance, the country missed three of five targets set for the second review of the 37-month Extended Fund Facility (EFF). The Federal Board of Revenue fell short of collecting PKR 12.3 trillion in total revenues and failed to generate PKR 50 billion from the much-publicized Tajir Dost Scheme intended to tax the retail sector — a program that local media reports describe as ineffective in bringing Pakistan’s vast informal economy into the tax net. Additionally, provincial governments did not achieve the PKR 1.2 trillion savings goal for the last fiscal year, citing higher expenditures.
India has consistently argued that IMF and other multilateral loans to Pakistan risk being diverted toward military spending and state-sponsored cross-border terrorism. At a recent IMF meeting, India’s representative, Parameswaran Iyer, underscored the need for moral and security considerations in lending procedures, noting Pakistan’s “very poor track record” in adhering to IMF program conditions.
The IMF approved the $7 billion arrangement in September last year, with an immediate $1 billion disbursement. The latest review was convened to assess Pakistan’s progress, but the repeated shortfalls have raised concerns over the effectiveness of both the IMF’s program design and Pakistan’s implementation capacity.
Analysts note that Pakistan’s political economy compounds these challenges. The military continues to wield significant influence over domestic politics and economic policy, even under a civilian government. A 2021 United Nations report described military-linked businesses as Pakistan’s “largest conglomerate” — a dynamic that persists today, with the army playing a lead role in the Special Investment Facilitation Council.
India also cited findings from the IMF’s own Evaluation of Prolonged Use of IMF Resources, which flagged political considerations in lending decisions to Pakistan. The country’s recurring bailouts have left it with a heavy debt burden, making it, in effect, a “too-big-to-fail” debtor for the Fund. (Source: IANS)
