IMF and US Influence

The United States commands a significant 16.49% voting share on the International Monetary Fund's (IMF) executive board. This substantial share grants the US effective veto power, allowing it to shape IMF decisions and outcomes.

IMF's Support to Pakistan

• Under the Extended Fund Facility (EFF), the IMF approved $1 billion for Pakistan, despite concerns over Pakistan's involvement in the April 22 Pahalgam terrorist attack.
• Pakistan has a history of sheltering terrorist entities and using extremist proxies, raising questions about IMF's credibility and conditionality in extending support.
• Since 2008, Pakistan has been frequently listed on the Financial Action Task Force’s (FATF) 'grey list' for failing to dismantle terror financing networks.

Global Governance and Strategic Concerns

• India abstained from voting on the IMF tranche to Pakistan, highlighting a pattern of 28 IMF programs over 35 years, with four in the past five years.
• External funding, lacking governance safeguards, may empower Pakistan's military, which often resists civilian oversight and supports regional non-state actors.
• The geopolitical context includes US-China strategic competition, with the US perhaps tolerating lower accountability thresholds to prevent Chinese influence in South Asia.

Historical Context and Current Economic Conditions

• The US historically extended aid to authoritarian allies to counter Soviet influence, a tactic now mirrored in relations with Pakistan as a strategic partner.
• Pakistan's economy is precarious, with over $130 billion in external debt and low foreign reserves, relying on bilateral aid and multilateral support.
• IMF notes Pakistan's economic fragility, but issues like its narrow tax base, opaque subsidies, and large defense expenditures remain unaddressed.

Geopolitical Expediency vs. Democratic Accountability

• Concerns arise about geopolitical priorities overriding democratic accountability and institutional coherence.
• The Intercept reported covert arms sales by Pakistan to support US military needs in Ukraine, coinciding with renewed IMF support.
• The US, involved in diplomatic maneuvers during the 2022 ousting of Pakistan's PM Imran Khan, underscores a focus on strategic alliances over democratic principles.

India's Response and Global Implications

• Pakistan's military allocates resources to strategic goals, including actions targeting India.
• India's responses have been measured and targeted, but ongoing provocations might challenge this strategic patience.

IMF's Role and US Responsibility

• IMF should promote macroeconomic stability, not facilitate geopolitical balancing or state-driven terror financing.
• The US, as a major IMF shareholder, must decide whether to prioritize principled global governance over strategic rivalry.

Overall, the document emphasizes the need for transparent, enforceable, and reform-linked frameworks in providing assistance to Pakistan, to ensure stability and prevent the misuse of funds for strategic or military purposes.