India Objects to ADB Loan for Pakistan
Analysis based on 7 articles · First reported Jun 04, 2025 · Last updated Jun 04, 2025
India's strong opposition to the Asian Development Bank's loan to Pakistan creates uncertainty for future aid to Pakistan and could impact the Asian Development Bank's risk profile. The concerns raised about Pakistan's economic stability and potential fund misuse may deter other international financial institutions from providing support.
India has vehemently opposed the Asian Development Bank's (ADB) approval of an $800 million program for Pakistan, citing serious concerns over the potential misuse of funds for military expenditure. India highlighted Pakistan's declining tax-to-GDP ratio (from 13.0% in FY2018 to 9.2% in FY2023) alongside increased defense spending, suggesting that external funds could be diverted. India also questioned the effectiveness of past reform programs supported by the ADB and the International Monetary Fund, noting Pakistan's repeated need for bailouts. Furthermore, India expressed strong reservations about Pakistan's governance structure, its alleged policy of cross-border terrorism, and unsatisfactory progress on Financial Action Task Force requirements, which India believes destabilizes the region and heightens macroeconomic risks for Pakistan and enterprise risks for the ADB. India warned that Pakistan's economic fragility, high debt-to-GDP ratio, and poor credit rating pose significant credit risks to the ADB, urging vigilance to safeguard the bank's financial health.
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