Pakistan gets a new lifeline, with $1 Billion loan under Extended Fund Facility (EFF) being approved by IMF for the country immediately. India put a strong foot forward to make the Executive Board realise the potential threat that this move may pose, and hence asked it to be reviewed.
As the IMF Executive Board has no mechanism of vetoing on these subject matters, there were only diplomatic channels that could have been pursued via voting. It is noteworthy that during the voting, India ABSTAINED from voting on it.
“In the 35 years since 1989, Pakistan has had disbursements IMF in 28 years. In the last 5 years since 2019, there have been 4 IMF programs. Had the previous programs succeeded in putting in place a sound macro-economic policy environment Pakistan would not have approached the Fund for yet another bail-out program.” MoF Statement said.
India had further requested a cautionary approach,“Rewarding continued sponsorship of cross-border terrorism sends a dangerous message to the global community, exposes funding agencies and donors to reputational risks, and makes a mockery of global values” the statement highlighted.
What is Extended Fund Facility (EFF) under which Pakistan got the IMF Loan?
As per IMF, “The Extended Fund Facility (EFF) provides financial assistance to countries facing serious medium-term balance of payments problems because of structural weaknesses that require time to address. To help countries implement medium-term structural reforms, the EFF offers longer program engagement and a longer repayment period.”
Poor Timing of the Loan Advancement
This news however comes at the cusp of India-Pakistan tensions running at an all time high, which at many places has been termed now as a war. An expected inhibition which could be fruitioned would be the sordid utilization of these funds for nefarious means rather than truly using them to uplift millions of Pakistanis struggling to eat two square meals a day.
Poverty in Pakistan
37.8% of Pakistan’s population was living below the national poverty line in FY2023.
Source: World Bank, April 2024
38.3% of people in Pakistan are multidimensionally poor, facing deprivations in health, education, and living standards.
Source: UNDP & OPHI, Global MPI Report 2023
Over 36.9% of households in Pakistan face moderate or severe food insecurity.
Source: FAO, State of Food Security Report 2023
Provincial Breakdown (Approximate MPI figures):
- Balochistan: 71%
- Sindh: 43%
- Khyber Pakhtunkhwa: 49%
- Punjab: 31%
Source: Planning Commission of Pakistan & UNDP MPI report 2023
Climate disasters (e.g., 2022 floods) pushed an estimated 9.1 million people into poverty.
Source: World Bank Flood Damage Assessment Report, 2023
Pakistani Reaction to the News
Pakistan’s Prime Minister Shehbaz Sharif lauded the development, describing it as a “defeat of India’s high-handed tactics.” He hailed the move as symbolic of international confidence in Pakistan. It still remains to be seen whether funds will be deployed or the loan will default.
Also Read: India Tightens Economic Screws Of Pakistan
