India has voiced strong objections to the Asian Development Bank’s (ADB) recent approval of an $800 million financial support package for Pakistan, warning that such funding could be misused amid Islamabad’s persistent involvement in cross-border terrorism and repeated economic bailouts.
According to government sources, India conveyed its concerns to ADB, citing Pakistan’s failure to comply with the Financial Action Task Force’s (FATF) mandates, particularly regarding the freezing of assets of UN-designated terrorist groups. India also warned that the security environment in South Asia is threatened by Pakistan’s support for terrorism, referencing the recent terror attack in Pahalgam as further evidence.
The ADB’s program, approved on Tuesday, aims to support Pakistan’s fiscal sustainability and public financial management under the “Improved Resource Mobilisation and Utilisation Reform Program Subprogram 2.” The package includes a $300 million policy-based loan and a $500 million guarantee to mobilize up to $1 billion in commercial financing.
India argued that Pakistan’s repeated reliance on International Monetary Fund (IMF) bailouts reflects systemic failure in implementing economic reforms. New Delhi highlighted that Pakistan’s tax-to-GDP ratio has deteriorated from 13% in 2018 to 9.2% in 2023, even as the country’s defence expenditure continued to rise.
Sources also pointed to Pakistan’s weak governance and the dominant role of the military in civilian economic policy, particularly through the Special Investment Facilitation Council (SIFC). Formed in June 2023, the SIFC is tasked with promoting foreign direct investment, but India claims it grants undue control to the military in economic matters.
India urged the ADB and other global financial institutions to reconsider future aid packages to Pakistan until Islamabad demonstrates genuine reform and ends its tacit support for terrorism. The objection is part of New Delhi’s broader diplomatic strategy to challenge international financial assistance to states it accuses of undermining regional peace and security.
The ADB, however, maintains that the aid is intended to assist Pakistan in improving its tax system, digital infrastructure, investment climate, and fiscal discipline to ensure long-term macroeconomic stability.
