IMF Approves $2.4 Billion Funding for Pakistan; India Abstains from Vote
On Thursday night (May 8, 2025), the Executive Board of the International Monetary Fund (IMF) approved a funding package of $2.4 billion for Pakistan across two separate programs. India, however, abstained from the vote, citing concerns over Pakistan’s “poor track record,” the potential misuse of the funds for state-sponsored terrorism, and the IMF’s adherence to “procedural and technical formalities.”
Under the IMF’s voting system, countries cannot directly oppose decisions to provide loans. Instead, they can only abstain from voting. Therefore, India chose to abstain, despite its strong reservations regarding the loan, which marks the 25th time Pakistan has received financial assistance from the IMF since 1948.
The $2.4 billion package is split between $1 billion from the ongoing $7 billion Extended Fund Facility (EFF) agreed upon in September 2025 and an additional $1.4 billion under the Resilience and Sustainability Facility (RSF).
Government sources revealed that while India raised concerns about Pakistan’s financial management and its use of IMF funds, it was constrained by the IMF’s voting structure. “The IMF system doesn’t allow for a ‘no’ vote; countries can only vote in favor or abstain,” an official explained to The Hindu. “Given these limitations, India abstained, and the Executive Board went ahead with the loan approval, despite our concerns and the ongoing geopolitical tensions.”
The IMF’s voting system is also marked by an imbalance in vote shares. While the grouping of India, Bangladesh, Bhutan, and Sri Lanka holds only 3.05% of the voting power, countries like the United States, Japan, and China hold significantly larger shares—16.49%, 6.14%, and 6.08%, respectively. As a result, even with India’s abstention, the approval of the loan was passed by a near-unanimous vote, with the structure of the voting system favoring larger powers.
In its statement, the IMF highlighted that Pakistan’s efforts under the EFF had shown “significant progress in stabilizing the economy,” noting strong fiscal performance that is expected to meet Pakistan’s GDP target of 2.1% by the end of the year. Furthermore, the IMF emphasized that the RSF would aid Pakistan in reducing vulnerabilities to natural disasters and strengthening its economic and climate resilience.
Despite this positive assessment, India voiced its concerns about the efficacy of IMF programs in Pakistan. The Indian Ministry of Finance (MoF) issued a statement on Friday evening, saying, “As an active and responsible member country, India raised concerns over the efficacy of IMF programs in Pakistan, given its poor track record, and the possibility that debt financing could be misused for state-sponsored cross-border terrorism.”
India’s stance is rooted in its ongoing security concerns regarding Pakistan, particularly the issue of cross-border terrorism. India’s objections reflect broader regional tensions, as the two nations remain locked in disputes over territorial claims and security concerns.
This development underscores the complexities of international financial aid, where geopolitical considerations often intersect with economic assistance, and how procedural rules can impact the decision-making process on critical global platforms like the IMF.
Source – The HINDU
