NEW DELHI: Days after clearing fresh assistance despite India’s strong opposition, International Monetary Fund (IMF) has flagged that heightened tension with its neighbour could increase the “enterprise risk” for Pakistan’s agreed reforms, while also cautioning about “reputational risk” due to a perception of fund diversion.
Setting out 11 new structural benchmarks for reforms under the bailout scheme, the multi-lateral agency warned “an intensification of political or social tensions” could also impact policy and reform implementation, in what was probably a reference to internal conflicts in Pakistan.
India’s concern, however, has more to do with the way Pakistan is being provided assistance despite its strong links with terror, as pointed out by Rajnath Singh last week. He had sounded an alert about possible diversion of funds by Pakistan govt to rebuild terror bases destroyed by Indian forces, and called for a rethink of the IMF assistance.
In the midst of Operation Sindoor , at the IMF board meeting on May 9, India had red-flagged disbursement of $1 billion loan to Pakistan, along with fresh assistance of $1.4 billion in the name of climate resilience, but the US and European countries backed the proposal and approved it.
IMF lists 11 new riders for Pakistan to avail loan
Reputational risks could also come from any perceived lack of even handed or if there was a perceived misuse of Fund disbursements. As mitigants, the Pakistani authorities have reiterated their strong commitment to the programme, which is designed to help restore economic stability, build resilience through stronger reserve buffers, and advance reforms to create stronger and inclusive growth,” the IMF documents noted.
Amid strong criticism from India, it said, “Careful Fund (IMF) communication will be essential to underscore the Fund’s neutral role and avoid misperceptions about its lending activities.”
Some of the international ratings agencies have also cautioned against an adverse impact on Pakistan of long-drawn tensions with India and the ceasefire is seen to have provided some relief to its fragile economy. The IMF documents sought to underline that the assistance to Pakistan has been given as it met the loan conditionalities.
While reiterating three structural benchmarks for the 37-month programme, which started last Sept, the global body added 11 new parameters including parliamentary approval for FY26 budget in line with its prescriptions, tax reforms and a governance diagnostic assessment and phaseout of tax benefits for SEZs and industrial parks.
Besides, it has underlined the need to move ahead with power and gas pricing reforms and phaseout of restrictions on automobile imports.
Setting out 11 new structural benchmarks for reforms under the bailout scheme, the multi-lateral agency warned “an intensification of political or social tensions” could also impact policy and reform implementation, in what was probably a reference to internal conflicts in Pakistan.
India’s concern, however, has more to do with the way Pakistan is being provided assistance despite its strong links with terror, as pointed out by Rajnath Singh last week. He had sounded an alert about possible diversion of funds by Pakistan govt to rebuild terror bases destroyed by Indian forces, and called for a rethink of the IMF assistance.
In the midst of Operation Sindoor , at the IMF board meeting on May 9, India had red-flagged disbursement of $1 billion loan to Pakistan, along with fresh assistance of $1.4 billion in the name of climate resilience, but the US and European countries backed the proposal and approved it.
IMF lists 11 new riders for Pakistan to avail loan
Reputational risks could also come from any perceived lack of even handed or if there was a perceived misuse of Fund disbursements. As mitigants, the Pakistani authorities have reiterated their strong commitment to the programme, which is designed to help restore economic stability, build resilience through stronger reserve buffers, and advance reforms to create stronger and inclusive growth,” the IMF documents noted.
Amid strong criticism from India, it said, “Careful Fund (IMF) communication will be essential to underscore the Fund’s neutral role and avoid misperceptions about its lending activities.”
Some of the international ratings agencies have also cautioned against an adverse impact on Pakistan of long-drawn tensions with India and the ceasefire is seen to have provided some relief to its fragile economy. The IMF documents sought to underline that the assistance to Pakistan has been given as it met the loan conditionalities.
While reiterating three structural benchmarks for the 37-month programme, which started last Sept, the global body added 11 new parameters including parliamentary approval for FY26 budget in line with its prescriptions, tax reforms and a governance diagnostic assessment and phaseout of tax benefits for SEZs and industrial parks.
Besides, it has underlined the need to move ahead with power and gas pricing reforms and phaseout of restrictions on automobile imports.
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