IMF Approves $1 Billion Loan for Pakistan Amid India's Abstention

IMF's Financial Support for Pakistan

The International Monetary Fund (IMF) has recently sanctioned a $1 billion loan to Pakistan. This decision followed the IMF's assessment of Pakistan's economic reform initiatives under the Extended Fund Facility (EFF). Additionally, the IMF is considering a new lending program, the Resilience and Sustainability Facility (RSF), which amounts to $1.4 billion for Pakistan.

India's Position on the Loan Vote

India chose to abstain from voting on Pakistan's loan programs, citing concerns related to terrorism. Reports from various media sources indicate that India's abstention was due to the voting system, which does not permit a formal 'no' vote. However, Subhash Chandra Garg, a former Finance Secretary of India and ex-Executive Director at the World Bank, disputed these claims in an interview, stating, 'This is not accurate. Countries have the option to vote against, abstain, or support. There is no rule preventing a country from voting against a proposal.'

Surprise Over India's Abstention

Garg expressed his astonishment at India's choice to abstain, questioning, 'Why did India not vote against and only abstained? This is something that needs clarification from the government. The claim that voting against was not an option is unfounded.'

IMF's Voting Process Explained

An IMF spokesperson clarified that Executive Directors can indeed vote yes, no, or abstain. However, she noted that in cases requiring a simple majority, whether a director votes no or abstains does not alter the outcome as long as there is a general consensus.

Impact of India's Vote on Pakistan's Bailout

Experts suggest that a 'no' vote from India could have had a more significant effect. Nonetheless, even if India had opposed the loan, it likely would not have been halted. The IMF typically operates on a consensus basis for decision-making, which minimizes the need for formal votes. Garg added, 'The United States possesses a veto power that allows it to block proposals, even if a majority supports them.'

Global Voting Shares at the IMF

It is important to note that even if India had voted against the loan, other nations would have likely supported it. The US, EU countries, and China are also key stakeholders in the IMF alongside India. The US holds a significant 16.49% voting share, while EU nations collectively account for approximately 25-30%. China has a 6.08% share, and India holds around 2.63%.

Conclusion on India's Influence

Given these dynamics, India's 'no' vote would not have substantially affected the approval of Pakistan's IMF bailout package.