On 9 May, the International Monetary Fund (IMF) approved a US$2.4 billion (US$1 billion under Extended Fund Facility and US$1.4 billion under Resilience and Sustainability Facility) financial loan for Pakistan. The decision came at a time of heightened tensions between India and Pakistan following India’s launch of Operation Sindoor – a focused, measured and non-escalatory air strike – targeting nine terror hideouts across the Line of Control, launched in response to the Pahalgam terror attack.
There are speculations and growing whispers, however, not corroborated through official sources that the IMF’s approval of the loan may not have been a purely economic decision. That it may have involved backchannel understandings and certain amount of arm-twisting mechanisms to de-escalate tensions with India. If such a ceasefire-linked condition was indeed part of the negotiations, then it suggests that India’s concerns – though not publicly acknowledged – were quietly taken into account. However, if no such terms were considered, it only reinforces the urgent need for India to craft more effective and foolproof strategies to ensure its voice is not just heard, but acted upon in global decision-making forums.
Regardless, the IMF’s move which favoured Pakistan’s approval of funds sparked criticism from Indian quarters. New Delhi not only abstained from the vote but also submitted a comprehensive, concrete evidence-based and data-laden report raising serious concerns about Pakistan’s eligibility for international financing. India’s extensive report highlighted Pakistan’s consistent misuse of foreign aid, continued harbouring of terror networks, and the diversion of funds from development objectives to destabilising regional security. Repeated grey-listing by the Financial Action Task Force (FATF) for failure to curb terror financing and abysmally poor track record in developmental indicators and public infrastructure exposes gap between funding received and utilised for societal upliftment. Yet, despite the evidence, the loan was approved. This underscores a persistent and troubling disconnect between global financial decision-making and geopolitical realities.
India’s response was not merely political rather it was a principled call for accountability. Its submission sought to establish that global institutions, by continuing to finance such states without stringent oversight, indirectly perpetuate regional insecurity. However, the IMF’s decision reaffirmed the structural asymmetry within its governance wherein economic and strategic interests of dominant powers still outweigh the grounded concerns of regional stakeholders.
A key reason for this imbalance is IMF’s quota-based voting system which heavily favours Western powers. The US alone holds over 16.5% of the total voting share. This effectively grants it veto power over major policy decisions. In contrast, India, despite being the fifth-largest economy, commands just 2.75% of the vote. This skewed structure enables a select group of countries to influence lending priorities according to their strategic interests. While Pakistan continues to receive financial bailouts, countries perceived as adversaries by the West often face financial exclusion. Iran is a glaring example. Though a founding member of the IMF, it remains functionally cut off from accessing IMF assistance due to the US-led sanctions and geopolitical pressure.
During Iran’s COVID-19 crisis in 2020, its emergency loan request to the IMF involving humanitarian and health concerns amid the pandemic was blocked under Western influence. Similarly, Venezuela’s access to IMF assistance has long been frozen due to contested leadership recognition despite the country facing a severe economic and social collapse. Afghanistan, under Taliban rule, has also been denied access to IMF and World Bank funds since 2021 due to the lack of recognition of its regime even though humanitarian needs have grown dramatically. In contrast, IMF support to Ukraine since 2022 has been generous and fast-tracked despite high risk ratings and ongoing conflict, reflecting clear political alignments.
Another key example is Russia. Following its invasion of Ukraine in 2022, Russia was swiftly isolated from multilateral financial institutions not merely through sanctions but also informal exclusion from access to IMF benefits. Though justified in few cases from a geopolitical standpoint, it shows how swift and coordinated the responses can be when strategic rivals are involved. These patterns raise troubling questions about the consistency and suggest double standards in IMF’s policy framework. Geopolitical allies are bailed out, adversaries are blocked.
This episode must serve as a wake-up call for India. It is no longer enough to express concern or register protest. India must now reimagine its approach to global financial institutions especially the Bretton Woods system and begin asserting the influence that befits its rising stature. The core issue lies in the mismatch between India’s growing economic and strategic relevance and its limited influence in institutional decision-making. Despite being the fifth-largest economy in the world and on track to become the third-largest by 2027–28, India holds only a 2.75% voting share in the IMF. This lopsided structure, remained unchanged since the post-World War II order, remains resistant to reform.
India must take the lead in advocating for comprehensive quota reforms within the IMF and World Bank so that a country’s voice is aligned with its economic weight, developmental contributions, and global responsibilities. At the same time, India’s opposition to unconditional lending should evolve into a broader campaign for accountability-linked financing. Countries that continue to support or tolerate terrorism should not qualify for soft conditionalities or unmonitored disbursements. Loans must come with transparent usage clauses, especially for states with a track record of misappropriating foreign assistance.
To build momentum, India should leverage its leadership across the Global South. It has already laid the groundwork through platforms like the Voice of the Global South Summit, the BRICS, and its recent G20 presidency. These coalitions share India’s frustrations and can act as collective pressure points for reform. In parallel, India should further expand its engagement with alternative multilateral institutions such as the New Development Bank and the Asian Infrastructure Investment Bank. These bodies offer a more balanced governance model and serve as counterweights to traditional Western-led institutions.
India’s positioning must also include strategic diplomacy.
It should work through key partner countries and even the India Caucus within the US policy establishment to build consensus on reforming aid conditionalities. It is equally important to increase India’s institutional presence in the IMF, World Bank, and similar organisations. By placing more Indian and not necessarily Indian-origin professionals in leadership and decision-making roles within these institutions, New Delhi can shape narratives and influence policy from within.
This is not merely a question of economic power it is also about moral leadership. India has demonstrated fiscal discipline, macroeconomic stability, and a commitment to democratic norms. It has long positioned itself as a responsible actor in global affairs. This credibility gives India the authority to question how international financial flows are often misaligned with global security objectives. As India steps into its role as a legitimate Global South voice, its calls for responsible lending, conditional financing, and institutional equity will become harder to overlook.
As the dust settles on the battlefield, it is increasingly clear now that India’s future victories will not only be won with precision strikes and border resilience, but also through assertive diplomacy in global institutions.
Despite Pakistan’s repeated provocations, disbursement of funds and international bailouts expose the loopholes in global financial systems more than ever. A system that fails to distinguish between a responsible democracy and a habitual offender. India this time has spoken with clarity, backed by data, and driven by principle.
Next, it needs to transform this clarity into strategic capital. Indeed, India’s next battle is not just with Pakistan but with the system that keeps letting Pakistan off the hook.
Author is a subject matter expert at Centre for Joint Warfare Studies and is the author of ‘India and the Gulf: A Security Perspective’