US Helped Pakistan Get IMF Funding In Exchange For Arms Sales to Ukraine: Report Claims

Leaked documents show Pakistan sold munitions to Ukraine from the summer of 2022 to the spring of 2023

US Helped Pakistan Get IMF Funding In Exchange For Arms Sales to Ukraine: Report Claims

The United States allegedly helped Pakistan secure funding from the International Monetary Fund (IMF) in exchange for selling munitions to Ukraine.

This was claimed in a report published by the online publication The Intercept on Monday.

The report claimed to base its information on leaked documents from America and Pakistan as well as publicly available but previously unreported disclosures of arms sales to the US posted by the State Bank of Pakistan.

The report claimed that an agreement was reached between Pakistan and the US over the sale of munitions produced by the former to the latter between the summer of 2022 and the spring of 2023, worth around $900 million.

Documents, the report claimed, listed Global Military Producers as the brokers of the deal. The broker is a subsidiary of Global Ordinance. 

The deal came at a time when negotiations between Islamabad and the International Monetary Fund (IMF) for the resumption of a $8 billion restructured Extended Fund Facility (upscaled from the original $6 billion brokered by the Pakistan government led by Imran Khan) came unstuck on foreign financing and refinancing targets. Pakistan was struggling to bridge the funding gap, and the weapons deal came through to shore some of those concerns and paved the way for the IMF to resume the programme.

The IMF, however, did not completely resume the programme. Rather, they truncated it in favour of a $3 billion Stand-By Arrangement (SBA) in July, just weeks before the rainbow coalition of the Pakistan Democratic Movement (PDM) completed its tenure at the helm of affairs in Pakistan.

The loan, however, is critical to shoring up Pakistan's economy, while the accompanying economic restructuring is necessary for the country to meet its debt obligations apart from jump-starting the economy.

In this regard, the publication claimed that Pakistan's Ambassador to the US Masood Khan met with US State Department Assistant Secretary Donald Lu in Washington in May this year. The report claimed that the two discussed Pakistani arms sales to Ukraine and how it was linked to the loan deal from the IMF.

It further claimed that the US had agreed to pay Pakistan around $900 million for the munitions and that it would discretely inform the IMF of the source of funds.

However, it must be noted that for the duration of the arms deal cited, Pakistan received only a few tranches agreed with the IMF under the EFF. In fact, until the SBA was announced towards the end of July 2023, Pakistan was in a major economic crisis with funds sufficient only for days of imports and the IMF refusing to release around $1.1 billion. 

Previously, The Intercept published the full text of the diplomatic cable sent by then-Pakistani Ambassador to the US Abdul Majeed Khan and his meeting with Donald Lu in which Lu spoke of what Pakistan could face if Imran Khan remained in power. Pakistan officially responded by issuing demarches to the US over Lu's statements, while at home, it sparked talk of conspiracy.