Despite recent relief from the International Monetary Fund (IMF), Pakistan's economic needs remain unmet. Pakistan has once again sought international assistance, securing a financial package of ₹668 crore (approximately US$80 million) from the Asian Development Bank (ADB).
Business: Pakistan's economic situation continues to deteriorate. Recent relief from the IMF has failed to improve its condition. Pakistan has again sought assistance from international institutions, obtaining a ₹668 crore financial package from the ADB. This move has raised concerns in India, which has bly opposed the package. India believes the funds may be misused, potentially diverted towards military preparedness and supporting terrorist activities.
ADB Package for Pakistan
The ADB package is intended to improve public financial management and reduce the budget deficit. However, India is concerned about Pakistan's history of misusing international aid. India fears these funds could be used to further Pakistan's anti-India agenda and support terrorist networks.
India's Strong Stance
India has warned the ADB that, given Pakistan's current economic situation, these funds could fall into the wrong hands. India also highlighted the military's significant control over Pakistan's budget, suggesting that economic aid may not be used for genuine reforms. Presenting financial data (shown below), India pointed out:
- Pakistan's tax-to-GDP ratio fell from 13% in 2018 to 9.2% in 2023.
- This indicates a government resource shortfall, yet military spending and arms purchases continue to rise.
Is Pakistan Misusing International Aid?
India's concerns are not merely economic but also geopolitical and security-related. For years, Pakistan has been accused of using aid from institutions like the IMF, World Bank, and ADB to support terrorist organizations. India argues this threatens not only South Asia but also global security.
India further stated that aiding Pakistan indirectly supports a country where the military dominates the democratic government and neglects civilian needs.
Why the Need Despite IMF Relief?
Pakistan recently received an IMF relief package, involving disbursements in installments. Despite this, Pakistan's return to the ADB highlights the precarious state of its economy and the inadequacy of existing aid.
India questioned the continued provision of aid, arguing that if Pakistan cannot utilize existing aid effectively, further assistance promotes financial irresponsibility. India has voiced its concerns about aid to Pakistan not only to the ADB but also to the United Nations, IMF, and other global forums. India believes such aid should be subject to strict conditions and oversight.
