India had vehemently opposed Asian Development Bank’s decision to grant $800 million loan to Pakistan saying the fund could be misused for increasing expenditure on its military, government sources said.
“India shared deep concerns regarding the potential misuse of ADB resources, particularly in light of Pakistan’s increasing defence expenditure, its declining tax-to-GDP ratio, and the lack of demonstrable progress on key macroeconomic reforms,” they said.
Asian Development Bank (ADB) on Tuesday approved $800 million programme to strengthen fiscal sustainability and improve public financial management in Pakistan.
Earlier in the day, the Congress in a post on X quipped that Prime Minister Narendra Modi met ADB President Masato Kanda on June 1 and three days later ADB cleared the $800-million loan to Pakistan.
Modi government’s influence did not work on the International Monetary Fund earlier and Pakistan got loan last month, the post said, adding that this happened even when the conflict between India and Pakistan was going on.
Government sources said India expects the ADB management to adequately ring-fence the ADB financing, to prevent any such misuse.
Pakistan’s poor track record of implementation stems from the military’s deeply entrenched interference in economic affairs, posing risks of policy slippages and reversal of reforms as has been witnessed in the past, they said.
Even when a civilian government is in power, the army continues to play an outsized role in domestic politics and extends its tentacles deep into the economy, they added.
Pakistan’s policy of cross-border terrorism has led to a worsening of the security situation in the region and has significantly escalated macroeconomic risks for Pakistan, which also heightens the enterprise risks for the ADB, sources said.
India also highlighted that the economic fragility of the borrowing country (Pakistan) poses credit risks to the ADB too, sources added.
