India-Pakistan Crisis: Blackouts, Drones, and a Question of IMF Aid

IMF to Review Pakistan Bailout Amid Rising Tensions

The International Monetary Fund (IMF) is set to review Pakistan’s $7 billion bailout package on Friday, amidst escalating tensions between Pakistan and India. This comes as India accuses Pakistan of launching drones and missiles at its military bases, a claim Pakistan vehemently denies.

India to Push Back Against Further Loans

Vikram Misri, India’s foreign secretary, stated that India will voice its concerns to the IMF, urging the board to carefully assess the effectiveness of past bailouts to Pakistan over the last three decades. This raises questions about whether India will attempt to block further financial assistance for Pakistan.

Pakistan’s Economic Struggle

The IMF bailout is crucial for Pakistan’s struggling economy, which is still recovering from a period of high inflation and sluggish growth. The country is desperately seeking financial support to stabilize its economic situation.

World Bank Rejects Intervention

Adding to the complexity, World Bank president Ajay Banga met with Indian Prime Minister Narendra Modi on Thursday. Meanwhile, the World Bank has made it clear they won’t interfere in the dispute between India and Pakistan regarding the Indus Waters Treaty (IWT), a historic water-sharing agreement. Banga emphasized that the treaty doesn’t allow for suspension and suggested that either it must be completely abrogated or replaced with a new agreement.

The World Bank’s role in the treaty is simply as a facilitator, according to Banga.