India has raised serious objections to the $ 800 million funding program recently approved by the Asian Development bank (ADB) to Pakistan. India fears that this fund may be used for Pakistan's increasing defense expenditure instead of development, especially when its economic condition is continuously weakening.
Pakistan's defense budget is constantly increasing
Indian officials say that Pakistan's tax collection (Tax-to-GDP Ratio) is continuously falling, while its defense budget is increasing. In such a situation, 'Policy-based Loans' received from external institutions like ADB can be misused. India clearly said that if the earlier ADB and IMF programs were successful, then pakistan would not have to take a bailout package from IMF for the 24th time.
What is this new funding program?
On june 3, ADB approved a plan called Improved Resource Mobilization and Utilization Reform Program- Subprogram 2 for Pakistan. Under this, a policy-based loan of $300 million and a guarantee of $500 million, which can raise up to $1 billion from commercial banks.
What did india say to ADB?
India has asked ADB to keep a strict watch on the use of this fund. Pakistan's economic weakness can also pose a risk to ADB. According to indian sources, the deep interference of the army in pakistan affects the pace of changes in policies and reforms. The army still has a lot of influence in economic matters there.
India has said that Pakistan's tax revenue was 13% in 2018, which decreased to just 9.2% in 2023. Whereas this average is 19% in Asia-Pacific countries. Despite low income, pakistan has increased its defence expenditure in these years. india says that this clearly shows that pakistan is not using its income properly.
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