As Pakistan attempts to seek a fresh IMF loan programme to meet its 6-8 billion US dollar financing needs, India has made a poor attempt at blocking the facility for Islamabad.

India’s nominee, executive director Krishnamurthy Subramanian, demanded ‘stringent monitoring’ of any emergency funds provided to Pakistan by the IMF during a recent review of Pakistan’s ongoing $3 billion short-term Stand-By Arrangement (SBA), Indian newspaper The Hindu reported.

“India has usually abstained from voting on loans sought by Pakistan and did the same last July when the SBA was approved,” the newspaper said adding that in mid-January, Subramanian “abstained from voting again, following which the IMF released a $700 million tranche to Pakistan.”

“However, this time, the Indian government requested Mr. Subramanian to convey to the IMF board the need to put in place ‘checks and balances and ensure a stringent monitoring’ of Pakistan’s utilisation of IMF money,” The Hindu reported.

“Such monitoring is imperative to ensure that funds received to meet development imperatives are not diverted towards defence spending and repayment of external debt owed to third countries,” the newspaper quoted the Indian executive director as saying.

Can India block Pakistan’s loan

IMF’s 24-member Executive Board has the final say on loans after IMF’s staff mission reaches an agreement with the country seeking financial assistance.

Executive Board members have voting rights but not all votes are equal. The weightage is determined by the special drawing rights (SDR) each of the 190 IMF member countries has.

The United States, for example, has 831,401 or 16.50% of votes on the board. While the US has its own executive director, smaller countries have been grouped and placed under a single executive director who speaks on their behalf.

Pakistan and six other countries – Algeria, Ghana, Iran, Libya, Morocco, and Tunisia – are represented by Mohammed El Qorchi and together they have 123,301 or 2.45% votes.

India’s Krishnamurthy Subramanian heads a group that also includes Bangladesh, Bhutan and Sri Lanka with 153,638 or 3.05% votes.

So, India cannot possibly block Pakistan’s loan unilaterally unless it launches a campaign within the IMF board.

How much money Pakistan needs

Pakistan’s financing needs are being estimated at between $6 billion and $8 billion.

The country has to pay $6 billion in debt servicing before the end of the current fiscal year in June. One of these major payments is expected in April when Pakistan’s dollar bonds mature and investors are paid a large sum.

Pakistan’s current IMF program, which is a standby arrangement worth three billion dollars, is ending in April itself. Pakistan is expected to get $1.2 billion in its final instalment.

In a recent assessment, Moody’s said Pakistan will be able to meet its external payments challenges until June 2024 but it has no hope of meeting large external financing needs after that.