India Sends World Bank ED Parameswaran For IMF Meet on Pak Aid

The sources also said that the decision was taken in view of the vacancy created by the termination of services of K V Subramanian as the IMF ED, six months ahead of his three-year tenure.

It is to be noted that the government’s decision has ramifications with regards to the meeting of the IMF Executive Board, which will be held on May 9, in which the Board is scheduled to take a call on a new US$ 1.3 billion loan to Pakistan under a climate resilience credit programme, along with the first review of an ongoing US$ 7 billion bailout package for India's neighbour.

In the backdrop of the recent Pahalgam terror attack, India is making all-out efforts to corner Pakistan diplomatically. According to sources, if India did not nominate Iyer, the alternative ED, Harischandra Pahath Kumbure Gedara of Sri Lanka, would have discharged the duties of the ED, as per IMF rules. 

On April 30, the Appointments Committee of the Cabinet had terminated Subramanian’s services with immediate effect, without attributing any official reason for the decision. 

A section within the government reportedly believes Subramanian had raised questions about IMF’s datasets, which did not go down well in the corridors of the multilateral agency, which was also unhappy with some other statements made by Subramanian in the past, especially those related to India’s debt situation.

Concerns were raised over an alleged "impropriety” relating to the promotion and publicity of Subramanian's latest book, India@100: Envisioning Tomorrow's Economic Powerhouse.

The IMF Executive Board is composed of 25 EDs elected by member countries or groups of countries. India is in a four-country constituency with Bangladesh, Sri Lanka and Bhutan as members.

What IMF May Give Pakistan

The IMF had earlier reached a staff-level agreement with Pakistan following discussions held from February 24 to March 14 in Karachi, Islamabad, and virtually. The agreement covers the first review of Pakistan’s 37-month Extended Fund Facility (EFF) and a new 28-month Resilience and Sustainability Facility (RSF) worth approximately $1.3 billion.

According to Nathan Porter, who led the IMF mission, the agreement is subject to approval by the IMF Executive Board. If approved, Pakistan will receive around $1 billion under the EFF, bringing total disbursements under the facility to $2 billion.

The IMF noted Pakistan’s progress in stabilising its economy, citing a decline in inflation, improved financial conditions, and stronger external balances. However, risks remain due to potential policy slippages, global economic shocks, and climate vulnerabilities.

The Pakistani government will be asked to reaffirm its commitment to economic reforms, targeting fiscal consolidation, tight monetary policy, energy sector reform, and structural improvements to state-owned enterprises. 

IMF sources said it will be insisting on Pakistan maintaining fiscal discipline while protecting social spending, particularly the Benazir Income Support Programme, and improving transparency in public financial management.

However, whether the tranche will be cleared in full or in part will depend on the board's decision and that is where Parameswaran Iyer's role will be crucial.