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Context:

India nominates Parameswaran Iyer to the International Monetary Fund (IMF) board amid key policy decisions.

Who is Parameswaran Iyer?

Parameswaran Iyer, a bureaucrat and international development professional, currently serves as India’s Executive Director at the World Bank.

He has a strong track record, having been the CEO of NITI Aayog (July 2022–February 2023), where he launched initiatives like the State Support Mission and the Aspirational Block Program, and accelerated the $25 billion Production Linked Incentive (PLI) scheme to boost manufacturing.

The IMF meeting on May 9, 2025, will address sensitive financial decisions involving Pakistan. His nomination ensures India retains its voting power and influence in the IMF.

IMF Meeting on May 9, 2025

The IMF Executive Board will meet to discuss two key issues involving Pakistan:

• New $1.3 Billion Climate Resilience Loan: This loan, part of the IMF’s Resilience and Sustainability Facility (RSF), aims to support Pakistan’s efforts to build sustainable infrastructure in climate-vulnerable regions. The IMF reached a staff-level agreement on this loan after discussions in early 2025.
• Review of $7 Billion Bailout Package: Pakistan is under a 37-month Extended Fund Facility (EFF) worth $7 billion, approved to stabilize its economy. The May 9 meeting will conduct the first performance review, determining whether Pakistan qualifies for the next $1 billion disbursement, bringing total disbursements to $2 billion.

India Opposing Pakistan’s IMF Loans  

India’s opposition to Pakistan’s IMF loans originates from a recent terror attack in Pahalgam, Jammu and Kashmir, on April 22, 2025, which killed 26 tourists. New Delhi believes Pakistan sponsored the attack and is using diplomatic and multilateral platforms to isolate Islamabad.

India’s actions include

• Diplomatic Pressure => India is lobbying global agencies to review loans and grants to Pakistan, citing concerns over state-sponsored terrorism.
• Economic Measures => India has suspended the Indus Waters Treaty, banned Pakistani imports, and scaled down diplomatic ties.
• IMF Strategy => India plans to ask the IMF to scrutinize Pakistan’s loans, a move Islamabad calls “politically motivated.” This reflects India’s broader strategy to impose costs on Pakistan for alleged terrorism in Kashmir.

 About International Monetary Fund (IMF)

It is a global organization that works to keep the world’s economy stable, promote trade, and reduce poverty. Its headquarters is in Washington, USA.

The IMF established in 1944 at the Bretton Woods Conference, where 44 countries decided to create a system for economic cooperation after World War II

What Does the IMF Do?

Monitor Global Economies

The IMF keeps an eye on the economic policies of its member countries. It collects data, analyzes trends, and advises governments to avoid problems. For example, it publishes reports like the World Economic Outlook and Global Financial Stability Report to share forecasts and warnings.

Provide Loans

When a country faces financial trouble, like a balance-of-payments crisis (when it can’t pay for imports or debts), the IMF lends money. These loans come with conditions, known as IMF conditionality, requiring countries to fix their economic policies, such as cutting spending or raising taxes (austerity). 

The IMF offers different loan programs:

• Concessional Loans (for low-income countries with low or no interest): Extended Credit Facility (ECF), Standby Credit Facility (SCF), Rapid Credit Facility (RCF).
• Non-Concessional Loans (with interest): Stand-By Arrangements (SBA), Flexible Credit Line (FCL), Precautionary and Liquidity Line (PLL), Extended Fund Facility.
• Emergency Loans: Rapid Financing Instrument (RFI) for urgent needs.

Offer Technical Assistance

The IMF trains government officials and provides expertise in areas like taxation, banking, and statistics. This capacity-building helps countries strengthen their economic systems. For example, it supports better data collection through systems like the General Data Dissemination System (GDDS) and Special Data Dissemination Standard (SDDS), started in 1996 and 1997.

How Does the IMF Work?

Membership

Any country can apply to join the IMF. The Executive Board reviews applications, and the Board of Governors approves them. Currently, 191 countries are members. Each member contributes a “quota” based on its economic size, which determines its voting power and borrowing limit.

Governance

• Board of Governors: Each country appoints one governor (usually a finance minister or central bank head). They meet annually to set major policies.
• Executive Board: 25 members handle daily operations, representing all countries. The U.S., Japan, and other major economies have significant influence.
• Managing Director: The head of the IMF, currently Kristalina Georgieva, chairs the Executive Board.

Funding

The IMF’s funds come from member quotas, which total about $1 trillion. The U.S. is the largest contributor, with 17% voting power, giving it a veto over major decisions. Special Drawing Rights (SDRs), an IMF-created reserve currency, supplement countries’ reserves.

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Source: 

THE HINDU