India Flags Risks In ADB's $800 Million Package To Pakistan
ADB has approved $800 million for Pakistan, aimed at strengthening fiscal sustainability and improving public financial management, stated reports on Tuesday, citing officials.
India has flagged severe risks arising from the Asian Development Bank's financing package for Pakistan, government sources told NDTV Profit.
The country has alleged fund misuse, reform failures and security threats as it warned of potential misuse of the recently approved package by ADB for Pakistan, said the sources.
ADB has approved $800 million for Pakistan, aimed at strengthening fiscal sustainability and improving public financial management, stated reports on Tuesday, citing officials.
While flagging the risks associated with this move, India highlighted the growing disconnect between Pakistan’s military spending and its poor domestic resource mobilisation, they said.
It also expressed concern that fungible financing instruments could indirectly fund defence expenditure, added the sources.
It is to be noted that despite declining revenues, Pakistan’s defence spending has increased, raising concerns over fund diversion.
Pakistan recently approached the International Monetary Fund (IMF) for the 24th bailout, indicating policy ineffectiveness. This further highlights that the previous ADB and IMF-supported programs have failed to create sustainable macroeconomic stability.
According to the sources, India has questioned the quality of program design, implementation, and monitoring.
it said that the Pakistan army continues to exert significant influence over economic policy, even under civilian governments. Military now leads the Special Investment Facilitation Council, deepening its economic involvement.
India warned this entrenched military role poses serious risks of policy reversal and poor reform implementation.
India also flagged Pakistan’s support for cross-border terrorism as a major regional security threat and raised concerns about the country's failure to comply with key FATF (Financial Action Task Force) action items. Among the failures highlighted were weak progress on terrorist financing investigations and inadequate prosecution of leaders of UN-designated terrorist groups.
Reforms in Pakistan are externally driven, creating dependency and undermining local ownership, it noted, emphasizing the importance of ADB rigorously monitoring policy implementation to ensure desired outcomes.
It added that Pakistan’s economic fragility and high debt-to-GDP ratio raise red flags for ADB’s financial exposure and persistently low credit ratings and reliance on external debt put ADB’s financial health at risk.
