ADB’s Aid to Pakistan: India has raised a serious objection to the Asian Development Bank’s recent decision to give $800 million in aid to Pakistan. Officials in New Delhi have said they are deeply worried that the money might not be used for the right reasons. They believe Pakistan could use this financial help in ways that go against the actual goals of the aid, especially because the country’s defence spending keeps going up while its own efforts to collect taxes are going down.
Indian officials said that instead of using the money to fix the country’s economy or improve the lives of its people, Pakistan might end up using it in other ways. They feel that because the money is flexible, or “fungible,” Pakistan might spend less of its own money on development and more on its military. India said it wants the ADB to keep a very close watch to make sure the money is really used for what it’s meant for.
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India pointed out that Pakistan’s tax-to-GDP ratio, which shows how much tax the country collects compared to its economy, has dropped a lot in recent years. It went from 13% in 2018 to just 9.2% in 2023. That’s much lower than the average in the Asia-Pacific region, which is around 19%. At the same time, Pakistan has been spending more and more on its military. Indian officials said this is a clear problem because the country is not raising enough money on its own, yet it keeps growing its defence budget.
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The ADB has agreed to give Pakistan a loan of $300 million and a $500 million guarantee. The money will be given to help Pakistan manage finances and improve themselvess. But India doesn’t trust that this will happen the right way. Officials in New Delhi said that if past international aid had really worked, then Pakistan wouldn’t have to keep asking for help.
They pointed out that Pakistan has already gone to the IMF for a bailout 23 times, and now it’s asking for its 24th. India thinks this shows that past programs didn’t actually fix anything, and the way those programs were created and monitored didn’t work.
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India also blames Pakistan’s military for getting too involved in the country’s economic matters. This has caused many problems in the past, and India thinks it could lead to more mistakes now. They believe this could stop any real progress from happening and could even reverse some of the good steps taken earlier. India said that because Pakistan’s economy is so weak, giving it more money could also be risky for the ADB.
India’s strong reaction came soon after a short but serious conflict with Pakistan in early May. The trouble started after a terror attack in Kashmir, which led India to carry out cross-border strikes. These strikes caused heavy fighting for four days until both countries agreed to a ceasefire on May 10. Not long after that, Pakistan got a new loan from the IMF, even though India spoke out strongly against it. India said Pakistan doesn’t deserve more help when it continues to increase its military spending and fails to push forward with real reforms.
