A report by The Intercept has revealed that Pakistan was able to secure an International Monetary Fund (IMF) bailout in June following secret Washington-brokered arms sales by Islamabad to Kyiv.
The deal helped Pakistan secured a $3 billion stand-by arrangement (SBA) from the IMF when it was grappling with an economic crisis. The report alleges the IMF SBA allowed Pakistan’s military to postpone elections, deepen a brutal political crackdown, and jail former PM Imran Khan.
The Intercept says that two sources aware of the arrangement and internal Pakistani and American documents have supported the claim.
Overview
When in dire economic straits, Pakistan was asked by the IMF to meet specific financing and refinancing targets related to its debt and foreign investment.
According to the report, an arms deal between the two countries came to the rescue in this situation, with munitions sales for the Ukrainian military helping to garner funds for the country.
U.S. helped Pakistan get IMF bailout with secret arms deal for Ukraine, leaked documents reveal https://t.co/a0zcy7et1T by @ryangrim, @mazmhussain https://t.co/a0zcy7et1T
— The Intercept (@theintercept) September 18, 2023
Pakistan is a production hub for several basic munitions essential for grinding warfare, and reports have surfaced about the use of Pakistani-produced shells by the Ukrainian military.
The supply of weapons to the Ukrainian military has caused Pakistan to get involved in the conflict on the side of the US-led Western bloc.
The Deal
According to The Intercept, munitions sales were agreed between the US and Pakistan from 2022 summer to 2023 spring, and were brokered by Global Military Products.
As per the investigation, Pakistani Ambassador to the US Masood Khan and US State Department’s Assistant Secretary of State Donald Lu met on 23 May 2023, days before the IMF bailout was secured in June end.
In the meeting, Lu suggested that arms sales to Ukraine could shore up Pakistan’s financial position in the eyes of the IMF.
The two sides hashed out the arrangement details, and the US cleared payment for the munitions production.
The US assured Pakistan that it would tell the IMF about the deal confidentially.
Arms contributions worth $900 million would help cover the remaining gap in financing required by the IMF, estimated to be around $2 billion.
While several media outlets have earlier reported on Pakistan supplying arms to Ukraine, former Pakistani Foreign Minister Bilawal Bhutto Zardari denied the claims during his Ukrainian counterpart, Dmytro Kuleba’s visit to Pakistan.
He said, “I’d like to reiterate that it is regrettable that certain media outlets have tried to publish unfounded reports alleging Pakistan has sent military supplies to Ukraine.”
US Interference, Imran Khan’s Removal, IMF Bailout
An earlier report by the Intercept said that the US State Department officials had warned Pakistan over its neutral stance on the Ukraine War and said that “all would be forgiven” in case Khan was removed.
According to the report, the US helped the Pakistani military orchestrate the removal of then-PM Imran Khan in April 2022.
Ever since the PTI chief’s removal, Pakistan has been useful to the US in assisting in Ukraine’s struggle against the Russian invasion.
The help provided by Pakistan was paid off in the form of a $3 billion emergency bailout to the country.
The IMF bailout that Pakistan secured prompted harsh policy reforms that led to protests and strikes in the country.
As reports of IMF help being extended to the country suffering from record inflation surfaced, IMF spokesperson Randa Elnagar denied that the institution was pressured.
Elnagar remarked, “We categorically deny the allegation that there was any external pressure on the IMF in one way or another while discussing support to Pakistan.”