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Asian Development Bank approves $800 million package for Pakistan over India’s objections

India warns the funds risk military diversion, urging strict safeguards on implementation.

Overview

  • The ADB’s $800 million programme comprises a $300 million policy-based loan and a $500 million guarantee to mobilise up to $1 billion from commercial banks and support Pakistan’s public finances.
  • India lodged formal objections, citing Pakistan’s drop in tax-to-GDP ratio from 13 percent to 9.2 percent, surging defence outlays and stalled economic reforms as red flags for fund misuse.
  • Last month Pakistan secured a $1 billion IMF package—its 24th bailout—underscoring its reliance on external financing amid insufficient macroeconomic restructuring.
  • New Delhi flagged the Pakistan military’s persistent influence over economic policymaking as a barrier to policy execution and a channel for diverting development funds.
  • India urged the ADB to ring-fence its policy matrix and intensify oversight to prevent fungible finance from bolstering defence budgets and to mitigate credit risks to the bank.