Pakistan secured an $800 million loan from the Asian Development Bank (ADB) on Tuesday despite objections from India’s government following last month’s military conflict between the two South Asian neighbours, report Bloomberg.
New Delhi highlighted Islamabad’s rising defence expenditure, weak governance and the outsized role of the military in its economic affairs, Indian officials told reporters, asking not to be identified, citing rules. India is a founding member of ADB and its fourth largest shareholder.
The Manila-headquartered bank gave a nod to the package, which included a $300 million policy-based loan and a $500 million policy-based guarantee, to strengthen Pakistan’s fiscal health and to improve public finances.
A spokesperson for India’s finance ministry didn’t immediately respond to an email requesting for a comment. Pakistan finance ministry spokesman was not immediately available to comment on India’s move.
Last month, India abstained from voting at an International Monetary Fund board meeting for approving a $1 billion loan tranche to Pakistan after gunmen killed 26 civilians -- mainly tourists -- in held Kashmir. India has accused Pakistan of supporting terrorist activities on its soil, a charge Pakistan denies.
New Delhi has approached several global lending bodies and urged them to pause future loan packages to Pakistan. But as the latest developments show, blocking financial aid to its neighbour is turning out to be difficult. In its submission to ADB, India flagged Pakistan’s poor track record of economic reforms and questioned the monitoring by the lender, the officials said.
It said Pakistan’s economic fragility posed credit risks to the ADB. India is pursuing Paris-based Financial Action Task Force to get its neighbour back on the ‘grey list’, which will increase scrutiny of its financial transactions, they added.