New Delhi/IBNS: India on Friday opposed the International Monetary Fund (IMF)'s proposal to extend fresh loans of USD 2.3 billion to Pakistan, saying the funds could be utilised for financing state-sponsored cross-border terrorism.

New Delhi abstained from voting at the crucial International Monetary Fund meeting.

As an active member country, India raised concerns over the efficacy of IMF programmes in the case of Pakistan, given its poor track record.

It also pointed to the possibility of misuse of debt financing funds for state-sponsored cross-border terrorism, the finance ministry said in a statement.

India registered its protest at the board of IMF, which met on Friday to review the Extended Fund Facility (EFF) lending programme (USD 1 billion) and also considered a fresh Resilience and Sustainability Facility (RSF) lending programme (USD 1.3 billion) for Pakistan.

"While the concern that fungible inflows from international financial institutions, like the IMF, could be misused for military and state-sponsored cross-border terrorist purposes resonated with several member countries, the IMF response is circumscribed by procedural and technical formalities," India said.

India's opposition at the IMF comes amid a heightened military conflict between India and Pakistan following a terrorist attack in Kashmir's Pahalgam on April 22 that killed 26 civilians, mostly Hindu tourists.

India argued that even when a civilian government is in power in Pakistan, the army continues to play an outsized role in domestic politics and extends its tentacles deep into the economy.

"In fact, a 2021 UN report described military-linked businesses as the 'largest conglomerate in Pakistan'".

"The situation has not changed for the better; rather, the Pakistan Army now plays a leading role in the Special Investment Facilitation Council of Pakistan," it said.

Earlier, the IMF laid a string of “tough conditions” to bail Pakistan out of its spiralling financial crisis, Prime Minister Shehbaz Sharif had reportedly said.

The IMF completed the ninth review of Pakistan's economy, paving the way for financial aid of over $1.1 billion from the global lender as well as bilateral loans from other nations and institutions.

However, the IMF wanted Pakistan to narrow its massive fiscal deficit, the gap between its expenses and revenues, reported The News International newspaper.

Before lending the money, the IMF wanted to be satisfied with the country's handling of the economic crisis.