Tracey Beatrice The recent approval of a $2.3 billion International Monetary Fund (IMF) bailout for Pakistan, despite strong objections and abstention from Bharat (India), has reignited the debate over the efficacy, ethics, and global security implications of continued international funding to Pakistan. This article provides a comprehensive analysis of why Bharat’s efforts to block the bailout failed, why Pakistan’s access to global funds is deeply problematic, and why the international community must reconsider the wisdom of financing a state with a long record of economic mismanagement and state-sponsored terrorism.
The IMF Bailout: What Happened and Why Bharat Objected
In May 2025, the IMF Executive Board approved a $2.3 billion package for Pakistan, including a $1 billion tranche under the Extended Fund Facility (EFF) and a $1.3 billion Resilience and Sustainability Facility (RSF). For Pakistan, facing depleted reserves and soaring inflation, this bailout was a lifeline. For Bharat, it was a dangerous precedent.
Bharat’s representatives at the IMF abstained from the vote, using the platform to lodge a formal protest. Their statement was unequivocal: Pakistan is a “prolonged borrower” with a “very poor track record of implementation and adherence to programme conditions.” In 28 of the last 35 years, Pakistan has received IMF disbursements, including four separate programmes since 2019 alone. Bharat argued that if previous bailouts had succeeded, another would not be necessary. Instead, repeated infusions have made Pakistan a “too big to fail debtor,” diluting accountability and encouraging reckless economic and security behavior.
Bharat also warned that IMF funds risk being diverted to state-sponsored cross-border terrorism, exposing global financial institutions to reputational risk and undermining international norms. The Ministry of Finance pointed to Pakistan’s persistent use of terror as an instrument of state policy, arguing that rewarding such behavior “makes a mockery of global values.”
Why Did Bharat Fail to Block the Bailout?
Despite Bharat’s strong objections, the IMF approved the bailout for several reasons:
1. IMF Voting Structure and Decision-Making
The IMF Executive Board does not allow for a formal “no” vote-members can only vote “yes” or abstain. With voting power weighted by economic size, and major economies such as the US and EU not opposing the package, Bharat’s abstention could only register dissent, not block the decision.
2. Geopolitical and Economic Calculations
Many IMF members view Pakistan as “too big to fail.” A default by Pakistan could destabilize the region, with spillover effects for global markets, migration, and security. Western powers, in particular, see IMF bailouts as a tool to maintain stability, even at the cost of repeated interventions.
3. Perceived Humanitarian Imperative
There is a persistent belief in Washington, Brussels, and other capitals that withholding funds would trigger mass suffering in Pakistan, potentially fueling radicalization and instability. This humanitarian argument often trumps concerns about accountability.
4. Pakistan’s Leverage and Diplomatic Maneuvering
Pakistan has become adept at leveraging its geostrategic position, playing on Western fears of nuclear insecurity and regional chaos. It presents itself as a frontline state against terrorism, even as evidence mounts of its own complicity in supporting militant groups.
The Case Against Funding Pakistan: Economic, Security, and Ethical Dimensions
1. A Cycle of Dependency and Economic Mismanagement
Pakistan’s economic woes are chronic and largely self-inflicted. Decades of poor governance, tax evasion, military dominance of the economy, and failure to implement structural reforms have left the country perpetually on the brink of crisis. Each IMF bailout is supposed to be the last, but none have led to sustained macroeconomic stability or growth. Instead, they have enabled a cycle of dependency, with new loans used to pay off old ones, and little incentive for real reform.
The Pakistani military’s deep involvement in the economy-described by a UN report as the country’s “largest conglomerate”-undermines civilian oversight and distorts policy. Even under civilian governments, the army dominates economic decision-making, increasing the risk of policy reversals and slippages.
2. Funding Terror: The Security Risk
Perhaps the most compelling argument against international funding for Pakistan is the persistent diversion of resources to support terrorism. Multiple credible reports, including those from the United Nations and FATF (Financial Action Task Force), have documented Pakistan’s use of state funds to sponsor, shelter, and arm terror groups operating in Afghanistan, Kashmir, and beyond.
Bharat’s Ministry of Finance explicitly warned the IMF that “misuse of debt financing funds for state-sponsored cross-border terrorism” is a real and present danger. By providing bailouts without robust safeguards and monitoring, the international community risks indirectly financing terror infrastructure that threatens regional and global security.
3. Moral Hazard and Global Norms
Repeated bailouts for Pakistan create a dangerous moral hazard. They signal to other states that persistent bad behavior-economic mismanagement, support for terrorism, and lack of reform-will be rewarded rather than punished. This undermines the credibility of the IMF and other global institutions, erodes trust in the rules-based order, and exposes donors to reputational and legal risks.
4. Failure of IMF Conditionality and Monitoring
IMF programs are supposed to come with strict conditions: fiscal discipline, tax reform, anti-corruption measures, and structural changes. In Pakistan’s case, these conditions have repeatedly been ignored or reversed. The IMF’s own internal reviews have flagged political considerations and weak enforcement as key reasons for the failure of its interventions in Pakistan. The result is a revolving door of bailouts with little to show for decades of “reform.”
Why Pakistan Should Not Have Access to International Funds
Given this record, there are compelling reasons why Pakistan should be denied further access to IMF and other international funds:
1. Persistent Non-Compliance and Lack of Reform
Pakistan’s serial non-compliance with IMF conditions undermines the very purpose of international financial assistance. Without credible reform and accountability, further funding only perpetuates the cycle of crisis and bailout.
2. State Sponsorship of Terrorism
No country that uses state resources to finance, shelter, or enable terrorism should be eligible for international support. Funding Pakistan, in effect, means funding terror-a reality that poses direct threats to Bharat, Afghanistan, and the wider world.
3. Military Dominance and Lack of Civilian Control
The Pakistani military’s entrenched role in the economy and politics makes meaningful reform impossible. International funds risk being diverted to military-run businesses and projects, further entrenching the army’s power and reducing the prospects for civilian governance.
4. Reputational and Legal Risks for Donors
Global institutions and donor countries face growing scrutiny over the use of their funds. Continuing to support Pakistan despite clear evidence of misuse exposes them to legal, political, and ethical challenges.
5. Undermining Global Norms and Accountability
Rewarding persistent violators of international norms sets a dangerous precedent. It weakens the global financial architecture and undermines efforts to promote transparency, accountability, and the rule of law.
What Should Change: Towards a New Approach
1. Strict Conditionality and Independent Monitoring
Any future funding to Pakistan must be tied to strict, independently monitored conditions, with clear benchmarks and automatic suspension of disbursements for non-compliance.
2. Transparency in Fund Use
Pakistan should be required to open its books to independent auditors, with full transparency on the use of international funds, especially to ensure they are not diverted to military or terror-related activities.
3. Accountability for State Sponsorship of Terrorism
International agencies must make eligibility for funding contingent on credible action against terror groups. This includes prosecution of perpetrators, dismantling of infrastructure, and verifiable cooperation with global counter-terror efforts.
4. Empowering Civilian Governance
Funding should be directed, wherever possible, to civilian-led projects and institutions, bypassing military-controlled entities. Support for civil society, education, and healthcare can help build resilience and reduce the appeal of extremism.
5. International Solidarity Against Terror Finance
Bharat’s stance should become the global norm: no funding for states that support terror. The international community must unite to close loopholes, enforce sanctions, and isolate state sponsors of terrorism.
Summary
Bharat’s failure to block the latest IMF bailout for Pakistan reflects the limitations of the current international financial system, which prioritizes short-term stability over long-term accountability. Yet the evidence is overwhelming: funding Pakistan means funding a state that has repeatedly misused international support, failed to reform, and continues to sponsor terrorism. The world must recognize that repeated bailouts only deepen Pakistan’s dependency, embolden its military elite, and undermine global security. It is time for a new approach-one that puts accountability, transparency, and the fight against terror at the heart of all international financial assistance.
