On 9 May 2025, the International Monetary Fund (IMF) released another $1 billion to Pakistan, a perennial economic basket case, its twenty-fifth programme since 1958. To Islamabad, the Fund has become less surgeon and more morphine dispenser-administering sedatives that stave off collapse while entrenching the very pathologies that caused it.
Pakistan's generals and kleptocrats pocket the stability premium; its citizens inherit the bill.
India recognised the paradox and, at the IMF Executive Board, abstained. We lacked the 85% super-majority needed to veto, a privilege de facto reserved for the US with its 16.5% quota. No country alone can block routine disbursements, which pass on a simple majority. India's 2.6% vote could therefore only register its considered moral dissent. It signalled that fresh dollars risk underwriting Pakistan's warmongering and cross-border terrorism and that multilateral finance for development must be inseparable from counter-terror conditionality.
India's abstention was the opening note of a new doctrine. Economic assistance must be welded to verifiable behavioural change-ceasefires monitored, terror-finance pipelines severed, military business empires taxed. FATF metrics and independent auditors provide the tools; what is required is collective resolve.
For once, the Fund listened-at least on paper. The 2025 programme includes the broadest governance benchmarks ever imposed on Pakistan: mandatory transparency reforms spanning fiscal management, procurement, banking oversight, terror-finance controls, curbing space for covert spending and military excess as Pakistan's war economy runs through these sectors.
These reforms stem from a 2024 IMF diagnostic and a 2025 Mission report that finally acknowledged what Pakistan's creditors long ignored: systemic rot, not cyclical mismanagement.
The IMF indicated it will not rubber-stamp Islamabad's balance sheets. If enforced-and that remains a towering 'if'-this may be the first time conditionalities go beyond ledgers and into power structures. The new tranche carries eleven additional benchmarks, including new fiscal constraints that in effect limit defence expansion, and a demand to root out corruption inside the military-industrial complex long protected by the Fauji Foundation and its opaque cousins.
Islamabad must publish a governance action plan. Oversight will rest on three legs: IMF staff reviews, parliamentary reporting and public disclosure via an online portal. Should Pakistan breach the envelope-by inflating arms spend or hiding military - terror enterprises-the next Board meeting should freeze the programme without ceremony.
These fiscal tripwires should also intertwine with the Financial Action Task Force (FATF) regime. Pakistan escaped the FATF greylist in October 2023, yet any relapse would now jeopardise its IMF credibility. Slip back into grey and disbursements slow; tumble into the blacklist and the tap closes altogether. That interlock gives India, lobbying for re-greylisting after the Pahalgam massacre, an indirect but potent veto.
But money is never merely monetary. Some reports from Washington suggest May's tranche was dangled as a carrot to coax a defeated Pakistan into pursuing for a ceasefire after the success of India's Operation Sindoo. Whether framed as inducement or condition, the linkage is undeniable: cash flowed when the guns fell silent.
That precedent must be codified. If Islamabad expects multilateral finance, it must first renounce both military adventurism and its perennial "Terroristan" role-play.
Western strategists insist that a nuclear-armed and fragile Pakistan cannot be allowed to fail.
China has its own logic for not allowing its client state to go under. But this argument has been rehearsed 24 times and has invariably financed failure. Each bailout stabilises nothing more than a pattern of impunity-a revolving door through which elites extract rents, the military secures its arsenals, and extremism finds sanctuary and reinforcement.
The IMF must be the lender of last resort worthy of its Articles of Agreement that would not bankroll states that weaponise insolvency for war and terror. It should not ignore the gendered and generational costs of diverting scarce revenue from classrooms and clinics to cantonments and covert fronts and subverts democracy. Stringent conditionalities with strict oversight is the only way forward if Pakistan is to be saved from itself.
Twenty-four programmes are not misfortune; they are the arithmetic of military-terrorist elite capture. Until Pakistan dismantles terrorist infrastructure-which was in plain view when India undertook pinpoint Operation Sindoor attacks and the subsequent camaraderie between politicians, military, and UN-designated terrorists and announcement of largess to terrorists - no external cash can purchase lasting recovery.
We cannot allow the international community to lapse into the "to each country its own terror fight" reflex on combating cross-border terrorism. Nor should it be a case of "your terrorist, not mine" ostrich mentality-or worse, using that as a lever against strategic partners like India.
The whole counterterrorism architecture, decision-making processes for designation of terrorist entities, and action under the UNSC's 1267 sanctions regime needs a revamp. The loopholes in FATF in deterrence and accountability action must be closed. The MFIs-the IMF and World Bank-must exercise greater punitive oversight over the Terroristans of the world they lend to, because peace, stability, and development are indivisible.
Unchecked assistance enables unchecked aggression. The world must make its money speak-loudly enough that even Rawalpindi hears and so finance becomes a bridge to peace; not a down payment on the next provocation. The IMF must not allow the revolving door to spin again-and extract a cost, in both treasure and blood, to be borne again by those who never signed the cheques .
The writer is a former Assistant Secretary General , United Nations
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com)
Pakistan's generals and kleptocrats pocket the stability premium; its citizens inherit the bill.
India recognised the paradox and, at the IMF Executive Board, abstained. We lacked the 85% super-majority needed to veto, a privilege de facto reserved for the US with its 16.5% quota. No country alone can block routine disbursements, which pass on a simple majority. India's 2.6% vote could therefore only register its considered moral dissent. It signalled that fresh dollars risk underwriting Pakistan's warmongering and cross-border terrorism and that multilateral finance for development must be inseparable from counter-terror conditionality.
India's abstention was the opening note of a new doctrine. Economic assistance must be welded to verifiable behavioural change-ceasefires monitored, terror-finance pipelines severed, military business empires taxed. FATF metrics and independent auditors provide the tools; what is required is collective resolve.
For once, the Fund listened-at least on paper. The 2025 programme includes the broadest governance benchmarks ever imposed on Pakistan: mandatory transparency reforms spanning fiscal management, procurement, banking oversight, terror-finance controls, curbing space for covert spending and military excess as Pakistan's war economy runs through these sectors.
These reforms stem from a 2024 IMF diagnostic and a 2025 Mission report that finally acknowledged what Pakistan's creditors long ignored: systemic rot, not cyclical mismanagement.
The IMF indicated it will not rubber-stamp Islamabad's balance sheets. If enforced-and that remains a towering 'if'-this may be the first time conditionalities go beyond ledgers and into power structures. The new tranche carries eleven additional benchmarks, including new fiscal constraints that in effect limit defence expansion, and a demand to root out corruption inside the military-industrial complex long protected by the Fauji Foundation and its opaque cousins.
Islamabad must publish a governance action plan. Oversight will rest on three legs: IMF staff reviews, parliamentary reporting and public disclosure via an online portal. Should Pakistan breach the envelope-by inflating arms spend or hiding military - terror enterprises-the next Board meeting should freeze the programme without ceremony.
These fiscal tripwires should also intertwine with the Financial Action Task Force (FATF) regime. Pakistan escaped the FATF greylist in October 2023, yet any relapse would now jeopardise its IMF credibility. Slip back into grey and disbursements slow; tumble into the blacklist and the tap closes altogether. That interlock gives India, lobbying for re-greylisting after the Pahalgam massacre, an indirect but potent veto.
But money is never merely monetary. Some reports from Washington suggest May's tranche was dangled as a carrot to coax a defeated Pakistan into pursuing for a ceasefire after the success of India's Operation Sindoo. Whether framed as inducement or condition, the linkage is undeniable: cash flowed when the guns fell silent.
That precedent must be codified. If Islamabad expects multilateral finance, it must first renounce both military adventurism and its perennial "Terroristan" role-play.
Western strategists insist that a nuclear-armed and fragile Pakistan cannot be allowed to fail.
China has its own logic for not allowing its client state to go under. But this argument has been rehearsed 24 times and has invariably financed failure. Each bailout stabilises nothing more than a pattern of impunity-a revolving door through which elites extract rents, the military secures its arsenals, and extremism finds sanctuary and reinforcement.
The IMF must be the lender of last resort worthy of its Articles of Agreement that would not bankroll states that weaponise insolvency for war and terror. It should not ignore the gendered and generational costs of diverting scarce revenue from classrooms and clinics to cantonments and covert fronts and subverts democracy. Stringent conditionalities with strict oversight is the only way forward if Pakistan is to be saved from itself.
Twenty-four programmes are not misfortune; they are the arithmetic of military-terrorist elite capture. Until Pakistan dismantles terrorist infrastructure-which was in plain view when India undertook pinpoint Operation Sindoor attacks and the subsequent camaraderie between politicians, military, and UN-designated terrorists and announcement of largess to terrorists - no external cash can purchase lasting recovery.
We cannot allow the international community to lapse into the "to each country its own terror fight" reflex on combating cross-border terrorism. Nor should it be a case of "your terrorist, not mine" ostrich mentality-or worse, using that as a lever against strategic partners like India.
The whole counterterrorism architecture, decision-making processes for designation of terrorist entities, and action under the UNSC's 1267 sanctions regime needs a revamp. The loopholes in FATF in deterrence and accountability action must be closed. The MFIs-the IMF and World Bank-must exercise greater punitive oversight over the Terroristans of the world they lend to, because peace, stability, and development are indivisible.
Unchecked assistance enables unchecked aggression. The world must make its money speak-loudly enough that even Rawalpindi hears and so finance becomes a bridge to peace; not a down payment on the next provocation. The IMF must not allow the revolving door to spin again-and extract a cost, in both treasure and blood, to be borne again by those who never signed the cheques .
The writer is a former Assistant Secretary General , United Nations
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com)
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