The Asian Development Bank (ADB) has approved an $800 million financial assistance package for Pakistan. This has triggered a sharp response from India, which has long opposed international aid to its neighbour over concerns of terror financing and economic mismanagement.
The ADB’s bailout is aimed at improving Pakistan’s public financial management. It comprises a $300 million policy-based loan and a $500 million program-based guarantee. The move follows Pakistan’s recent $1 billion agreement with the International Monetary Fund (IMF), secured last month.
India had formally urged the ADB and other global financial institutions to halt funding to Pakistan, citing grave concerns about potential misuse of funds, especially following the recent Pahalgam terror attack in Jammu and Kashmir.
It has been reported in the media that India strongly opposed the ADB’s decision, presenting a detailed case outlining Pakistan’s economic instability, poor governance, and persistent support for cross-border terrorism.
India had pointed out that Pakistan’s tax revenue has dropped drastically — from 13 percent of GDP in 2018 to just 9.2 percent in 2023 — indicating declining economic capacity.
India also warned that foreign loans could be diverted to military expenditure rather than being used for development, citing Pakistan’s rising defense budget.
It has been further reported that India expressed concern over the growing influence of Pakistan’s military in economic matters, particularly through the Special Investment Facilitation Council, established in June 2023 to attract foreign investment.
India also pointed out that despite repeated loan programs from the ADB and IMF, Pakistan has failed to implement crucial structural reforms.
Pakistan has also been accused by India of failing to meet obligations under the Financial Action Task Force (FATF), including freezing the assets of UN-designated terrorist organizations. India warned that continued financial support could risk aiding terror networks and destabilizing the region.
India is also reportedly considering pushing for Pakistan’s return to the FATF’s “grey list”, which would subject Islamabad to increased international scrutiny and restrictions on financial transactions.
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