The Foreign Office (FO) on Monday rejected a media report claiming that Pakistan sold weapons to Ukraine via the United States to get its much-needed International Monetary Fund (IMF) bailout package.
According to a report by The Intercept, Pakistan reportedly engaged “in secret arms sales to the United States as part of a bailout deal with the IMF earlier this year”.
The report claimed that the arms sales were intended for the Ukrainian military, which would force Pakistan to take a side in the Russia-Ukraine conflict.
The Intercept cited two sources with knowledge of the arrangement, as well as internal documents from both the Pakistani and American governments, to support its claims.
However, FO Spokesperson Mumtaz Zahra Baloch rejected the story as “baseless and fabricated”.
Pakistan urged to take the side of Ukraine
“The IMF Standby Arrangement (SBA) for Pakistan was successfully negotiated between Pakistan and the IMF to implement difficult but essential economic reforms. Giving any other colour to these negotiations is disingenuous,” she added.
Baloch said Pakistan maintains a policy of strict neutrality in the dispute between Ukraine and Russia and in that context, does not provide any arms and ammunition to them.
“Pakistan’s defence exports are always accompanied with strict end user requirements,” she concluded.
According to The Intercept report, the US State Department was unhappy with Pakistan’s neutral stance on the Ukraine conflict under former prime minister Imran Khan. “After Imran was ousted from power, Pakistan became a valuable ally to the US and its allies in the war, and this support was allegedly rewarded with the IMF bailout,” the report claimed.
The publication added the IMF bailout package has led to high inflation in Pakistan, resulting in widespread protests.
Pakistan is known for producing basic munitions used in protracted conflicts, and there is evidence that Ukrainian forces have used Pakistani-produced weapons. However, neither the US nor Pakistan has officially acknowledged this arrangement.
According to the publication, the arms deals were brokered by Global Military Products, a subsidiary of Global Ordnance.
“The economic capital and political support garnered from the arms sales played a significant role in securing the IMF bailout,” it said, adding that the State Department reportedly informed the IMF about the undisclosed weapons deal as part of the agreement.
According to the report, critics argue that Pakistan’s democracy is at risk due to its involvement in the Ukraine conflict and the subsequent IMF bailout.
In May 2023, Pakistani Ambassador to the US Masood Khan met with Assistant Secretary of State Donald Lu to discuss how Pakistani arms sales to Ukraine could improve Pakistan’s financial position with the IMF, it claimed.
The US agreed to inform the IMF confidentially about the arms programme, which was believed to be worth $900 million. This funding would help fill a gap in the IMF financing requirement, it maintained.
A staff-level agreement for the IMF’s SBA was reached on June 30 before the lender’s Executive Board gave its approval the next month. The bailout package, worth nearly $3 billion, came at a time when talks of default had gathered pace.
Since the IMF programme, Pakistan has seen its foreign exchange reserves get a boost with inflows from Saudi Arabia and the UAE also helping the economic position.