IMF assures Pakistan’s bailout funds meant only for economic support

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MG News | May 23, 2025 at 04:06 PM GMT+05:00

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May 23, 2025 (MLN): The International Monetary Fund (IMF) has firmly rejected concerns raised by Indian media suggesting that Pakistan could misuse its bailout funds for military purposes or cross-border activities.

During a press briefing, Julie Kozack, Director of the IMF’s Communications Department, clarified that all financing under the Extended Fund Facility (EFF) is strictly intended to resolve balance of payments problems and cannot be diverted for military or non-economic uses.

She emphasized that disbursements are allocated directly to the central bank’s reserves and are not used to finance government expenditures.

Kozack outlined the Fund’s safeguards, including a zero ceiling on central bank lending to the government, targets for the accumulation of international reserves, and a framework of structural conditionalities aimed at improving fiscal management and economic governance.

She added that these conditions are publicly available in program documents and any deviation would impact future disbursements, as per the press release.

The IMF’s response follows regional criticism after its Executive Board approved a new tranche for Pakistan on May 9, 2025.

Kozack provided a timeline, noting the EFF program was approved in September 2024, with a staff-level agreement for the first review reached on March 25, 2025.

The Executive Board completed the review and authorized disbursement on May 9.

She explained that Board reviews assess program progress and condition compliance, and in Pakistan’s case, the Board found that targets had been met and reforms were progressing.

While IMF Board voting details are not publicly disclosed, Kozack stated that there was sufficient consensus to approve the review.

Addressing geopolitical questions, Kozack expressed the Fund’s sympathy for the loss of life resulting from recent tensions between Pakistan and India, and reiterated the IMF’s hope for a peaceful resolution.

She reaffirmed that the IMF remains neutral and that all financial support is focused solely on economic recovery.

On a separate matter, she responded to questions regarding the termination of India’s Executive Director at the IMF, K.V. Subramanian, stating that appointments of Executive Directors are solely the responsibility of the member country and not within the IMF’s purview.

Copyright Mettis Link News

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