Walk the talk

 

WITHIN days of India raising concerns over the efficacy of International Monetary Fund (IMF) programmes for Pakistan despite the risk of misuse of debt-financing funds for State-sponsored terrorism, the international lending agency has flagged “reputational risks” over the fund approval and also slapped 11 new conditions on Pakistan for the release of the next tranche. The development can be seen as a good, though limited, gain for India as it applied pressure on the international community and the IMF to isolate Pakistan over its open support for terror groups. Though the IMF did not stop the 2.4 billion dollar facility to Pakistan, by issuing 11 new structural benchmarks linked to fiscal, governance, social, monetary and financial parameters and warning that tensions with India risk the reform goals, the agency has put Pakistan on notice. The key here is how Pakistan responds to the new conditions and whether the IMF has a ready mechanism to judge the faults without any biases.

 

This is no distrusting the IMF or its systems but a simple query on behalf of the Indians about the mechanism in place to hold a terror-sponsoring State accountable if it defaults and misuses the funds. Past experiences have shown that the IMF’s domain is limited to bailing out struggling economies and analysing reform goals as per the financial data provided by the beneficiary country. The role of finding misuse of international fund for terror lies with the Financial Action Task Force (FATF). The IMF would need to collaborate with the FATF and similar agencies for Pakistan after its role has been clearly established in the terror attack in Pahalgam which took 26 innocent lives. Pakistan had been a beneficiary in the FATF, too, when it removed the country from the grey list despite default on many counts. India’s apprehension about the IMF stems from these many experiences. Before the latest tranche of bail-out package was released by the IMF, India had repeatedly urged the agency to consider the damning role of Pakistan in fomenting cross-border terrorism.

 

New Delhi had even abstained from voting in the board meeting as it raised concerns over the bail-out. Before the IMF meeting, Foreign Secretary Mr. Vikram Misri had said that the Fund’s Board should look “deep within” and take into account the facts before generously bailing out the country. India’s concerns were reportedly discussed in the board meeting but the IMF used its financial parameters with a fixed set of norms to help Pakistan with the latest fund. Yet, the sustained pressure put by India’s diplomatic channels have brought some gains. The IMF board has flagged “reputational risks” that could come from any “perceived lack of even-handed” or “perceived misuse of Fund disbursements”. It now needs to walk the talk and carry out additional audit of Pakistan’s performance to rule out diversion of fund for activities other than mandated by the IMF programme.

 

For India, the next logical step is to continue monitoring Pakistan’s actions and document its misadventures carried out in the name of national defence. A truckload of dossiers must be kept ready to expose the Rogue State as it is set to return to the dirty course very soon, for, terror remains Pakistan’s State policy. The Deep State is not bothered by the economic fall-out of its actions and hence India has the additional responsibility of keeping evidence ready for agencies like the IMF, the FATF, and the United Nations Security Council (UNSC). All these agencies have been found wanting in their response to the Pahalgam terror attack. The international tradition of keeping a safe distance from Indo-Pak tensions is bound to continue in the future too. Hence, India will have to rev up its machinery to make them walk the talk.