Parliament, Mumbai, Pulwama and now Pahalgam: How IMF funding to Pakistan correlates with all the major terror attacks

Is Pakistan using the disbursements from the International Monetary Fund (IMF) and other multilateral agencies to fund terror against India, as pointed out in India’s stand against the latest $2.3 billion assistance to Pakistan by the agency? India raised concerns on the possibility of misuse of debt financing funds by Pakistan for state sponsored cross-border terrorism, and abstained from voting on the proposal on May 9.

So, is there a correlation between the IMF funding to Pak and export of terror to India by Pakistan? As things stand now, within seventeen days of the dastardly terror attack in Pahalgam, in which terrorists belonging to The Resistance Front – a Lashkr – e – Taiba proxy – gunned down 26 tourists, Pakistan has walked away with a mega $2.3 billion dole from the IMF. IMF has approved funding worth $1 billion under the extended fund facility (EFF) and $1.3 billion under the resilience and sustainability facility (RSF).

IMF’s funding history to Pakistan suggests that immediately before or after a major terror attack on the Indian soil, Pakistan had received funding assistance from the IMF. Data shows that the timing of Pakistan’s IMF funding in the past coincides with three major terror attacks on India: the Parliament attack in 2001, the Mumbai terror attack (2008) and Pulwama (2019).

Take for example the Parliament attack on 13 December 2001, in which six Delhi police personnel, two parliament security service personnel, and a gardener were killed. On 6 December 2001 -- just a week ahead of the parliament attack, IMF granted an extended fund facility, like the once approved on May 9, to Pakistan worth $1.43 billion.

Again, just two days ahead of the Mumbai terror attack on 26 November, 2008, IMF granted $10 billion assistance to Pakistan. It was touted that the assistance was provided to Pakistan in the wake of the economic disruption caused by the global economic crisis. This was a stand-by arrangement, which provides short term financial help to countries facing balance of payments problems.

Also, within six months of the Pulwama attack in 2019, Pakistan received a $6 billion dole from the IMF in form of EFF, which provides medium term financing to the low-income countries. “On July 3, 2019, the Executive Board of the International Monetary Fund (IMF) approved a 39-month extended arrangement under the Extended Fund Facility (EFF) for Pakistan for an amount of SDR 4,268 million (about US$6 billion or 210 percent of quota) to support the authorities’ economic reform program,” the IMF said in a release at that time.

“The EFF-supported program will help Pakistan to reduce economic vulnerabilities and generate sustainable and balanced growth focusing on: a decisive fiscal consolidation to reduce public debt and build resilience while expanding social spending; a flexible, market-determined exchange rate to restore competitiveness and rebuild official reserves; to eliminate quasi-fiscal losses in the energy sector; and to strengthen institutions and enhance transparency,” it added.

Well, those may have been the noble goals, but the way the Pakistani economy tanked in the subsequent years with inflation hitting the roof, and GDP growth tanking, it is evidently clear that the IMF money is clearly not helping the cause for which it was given. That said, in the last couple of years, the Pakistan sponsored terror attacks in India have only grown, culminating in the dastardly Pahalgam attack.

“Pakistan has been a prolonged borrower from the IMF, with a very poor track record of implementation and of adherence to the IMF’s program conditions. In the 35 years since 1989, Pakistan has had disbursements from the 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 macroeconomic policy environment, Pakistan would not have approached the Fund for yet another bailout program,” the Indian government said on its stand in the IMF’s recent loan proposal to Pakistan, in which India abstained from voting.

India pointed on May 9 out that such a track record calls into question either the effectiveness of the IMF program designs in case of Pakistan or their monitoring or their implementation by Pakistan.

“Pakistan military’s deeply entrenched interference in economic affairs poses significant risks of policy slippages and reversal of reforms. Even when a civilian government is in power now, the army continues to play an outsized role in domestic politics and extends its tentacles deep into the economy,” India said.

Experts feel it is high time IMF takes a serious note of whether Pakistan is diverting IMF funding towards terror activities.