he International Monetary Fund (IMF) approved a $1 billion aid installment for Pakistan—a move that drew strong criticism from India. Despite the ongoing military tensions between the nuclear-armed neighbors, the IMF’s decision came just before a surprise ceasefire was announced under U.S. leadership.
The Geopolitical Landscape of India Pakistan IMF Aid
India voiced strong and unambiguous opposition to the IMF bailout.. The Indian government raised concerns about Pakistan’s poor track record in implementing economic reforms, questioning the effectiveness of the IMF’s financial support. More significantly, India emphasized the possibility that the money would be misappropriated for “state-sponsored cross-border terrorism,” a claim Pakistan has consistently refuted.
However, India’s efforts to block the bailout were unsuccessful. The IMF board approved the second installment of a $7 billion loan package, citing Pakistan’s commitment to economic reforms and resilience-building measures against climate risks and natural disasters. The IMF also indicated that Pakistan could potentially receive an additional $1.4 billion in future funding.
Why India Couldn’t Prevent the IMF Aid
One key reason India couldn’t stop the bailout lies in its limited influence within the IMF’s decision-making process. Unlike the United Nations, where every country has an equal vote, the IMF’s voting system is weighted according to a country’s economic size and financial contribution.
The United States holds the largest voting share at 16.49%, while India’s share is only 2.6%. Furthermore, according to IMF regulations, members can only vote in favor of or against ideas; most decisions are reached by consensus.
India represents a group of four countries on the IMF board, while Pakistan is part of the Central Asia constituency represented by Iran. This division, combined with India’s smaller voting power, limits its ability to influence IMF decisions directly—especially against a backdrop of complex geopolitical and economic considerations.
Pakistani Experts Acknowledge India’s Concerns
Some Pakistani analysts agree with India’s criticism of Pakistan’s repeated reliance on IMF bailouts without substantial reforms. Since 1958, Pakistan has sought IMF assistance 24 times, indicating deep-rooted structural issues in its economy.
According to former Pakistani Ambassador Husain Haqqani, “Visiting the IMF is similar to visiting the intensive care unit.” If a patient ends up there 24 or 25 times, it signals urgent need for structural reforms.”
Yet, addressing the allegation that IMF aid indirectly supports cross-border terrorism is far more complicated and politically sensitive, which likely contributed to India’s inability to stop the bailout.
Calls for IMF Reform and the Global Context
India has been actively pushing for reforms to make the IMF’s governance more representative of emerging economies. During its 2023 G20 presidency, India highlighted the need to decouple voting power from financial contributions to ensure fairer global representation.
However, such reforms remain stalled. Adding to the complexity, the IMF’s unprecedented $15.6 billion loan to war-torn Ukraine in 2023 set a precedent, making it harder to justify withholding aid from Pakistan on the same grounds.
As Mihir Sharma from Delhi’s Observer Research Foundation noted, “The IMF bent its rules to provide a large aid package to Ukraine, which means it can’t now use those same rules as a reason to stop existing aid to Pakistan.”
