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Informist, Wednesday, Jun. 4, 2025

--Govt sources: India hopes ADB to adequately ring-fence funding to Pakistan 
--Govt sources: India flagged concerns of Pakistan likely misusing ADB funds 
--Govt sources: India "vehemently" opposed ADB's fincl support to Pakistan 

--CONTEXT: ADB Tue okayed $800 mln funds to Pak for fiscal sustainability 

NEW DELHI - India has "vehemently opposed" and expressed concern over Asian Development Bank providing financial support to Pakistan, government sources said Wednesday. This comes after the multilateral development bank approved a $800 million programme for Pakistan to boost the country's public finances. 

"India cautioned the ADB regarding the possibility of misuse of its resources," one of the sources said. "The linkage between Pakistan's increase in expenditure on its military, as opposed to on development, cannot be fully explained solely in terms of its domestic resource mobilisation."

In the aftermath of the terrorist attack by Pakistan-based militant outfits in Kashmir's Pahalgam in April, India has been opposing funding to the neighbouring nation at all global platforms. Last month, New Delhi had raised concerns over International Monetary Fund's bailout package to Islamabad. The IMF board approved $7 billion loan to Pakistan despite India's protest. 

The conflict between India and Pakistan had escalated after the terrorist attack on Apr 22, which had claimed 26 lives. In response to the Pahalgam attack, Indian armed forces, under Operation Sindoor, neutralised nine terror camps in Pakistan.    

To ADB, India highlighted that even though Pakistan's tax collection as a share of GDP fell to 9.2% in 2022-23 (Apr-Mar) from 13% in FY18, the country's defence spending has increased significantly in those five years, according to the sources quoted above. "This points to possibility of diversion of funds made available to the country by the external agencies."

India expects the ADB management to adequately ring-fence the agency's financing, to prevent any misuse, the government source said. "India also highlighted that the economic fragility of the borrowing country (Pakistan) poses credit risks to the ADB too. Pakistan's continued reliance on external debt raises concerns about the long-term sustainability of future exposures, especially in view of the high debt-to-GDP ratio and poor credit rating of the country."  End
 

US$1 = INR 85.90

Reported by Krity Ambey

Edited by Vandana Hingorani

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