WASHINGTON/ISLAMABAD  -  The International Monetary Fund (IMF) on Thursday defended its decision to release a $1 billion tranche to Pakistan, despite India’s objection, by pointing out the country had met all requisite targets under the Extended Fund Facility (EFF).

During a news briefing in Washington on Thursday, IMF Communications Director Julie Kozack said the international lender provided financing to member states for the purpose of resolving balance of payments problems. She said that the IMF carried out a review of its extended fund facility (EFF) granted to Pakistan in September last year and based on it, the board approved the amount on May 9.

When asked about a question on the recent bailout package by IMF to Pakistan, Ms. Kozack said, “With respect to the Indian Executive Director who had been at the Fund, all I can say on this is that the appointment of Executive Directors is a member for the -- is a matter for the member country.  It’s not a matter for the Fund, and it’s completely up to the country authorities to determine who represents them at the Fund.”  

“With respect to Pakistan and the conflict with India, I want to start here by first expressing our regrets and sympathies for the loss of life and for the human toll from the recent conflict. We do hope for a peaceful resolution of the conflict.”  

Now, turning to some of the specific questions about the Board approval of Pakistan’s program, she said, I’m going to step back a minute and provide a little bit of the chronology and timeframe.  The IMF Executive Board approved Pakistan’s EFF program in September of 2024.  And the First review at that time was planned for the first quarter of 2025.  And consistent with that timeline, on March 25th of 2025, the IMF Staff and the Pakistani authorities reached a Staff-Level Agreement on the First Review for the EFF.

That agreement, that Staff-Level Agreement, was then presented to our Executive Board, and our Executive Board completed the review on May 9th.  As a result of the completion of that review, Pakistan received the disbursement at that time.  

She also said that with respect to the voting or the decision-making at our Board, “We do not disclose that publicly.  In general, Fund Board decisions are taken by consensus, and in this case, there was a sufficient consensus at the Board to allow us to move forward or for the Board to decide to move forward and complete Pakistan’s review.”

“And with respect to the question on safeguards, I do want to make three points here.  The first is that IMF financing is provided to members for the purpose of resolving balance of payments problems.  

In the case of Pakistan, and this is my second point, the EFF disbursements, all of the disbursements received under the EFF, are allocated to the reserves of the central bank.”  She continued, “So, those disbursements are at the central bank, and under the program, those resources are not part of budget financing, she added. They are not transferred to the government to support the budget.”

And the third point is that the program provides additional safeguards through our conditionality.

And these include, for example, targets on the accumulation of international reserves.  It includes a zero target, meaning no lending from the central bank to the government.  And the program also includes substantial structural conditionality around improving fiscal management.  And these conditions are all available in the program documents if you wanted to do a deeper dive.  And, of course, any deviation from the established program conditions would impact future reviews under the Pakistan program.  

Meanwhile, a delegation of the International Monetary Fund led by Jihad Azour called on President Asif Ali Zardari in Islamabad on Friday.

Finance Minister Muhammad Aurangzeb, Senator Saleem Mandviwalla, and senior officials were also present on the occasion.

During the meeting, views were exchanged on overall economic situation of the country and ongoing IMF programme.

The President commended the IMF programme for bringing economic stability to Pakistan.

He emphasized that the programme would further promote economic growth in the country. He acknowledged that the IMF plays a key role in fostering economic development in emerging economies. He also appreciated the IMF’s role in Pakistan’s economic progress.

The delegation expressed satisfaction with Pakistan’s economic reforms and the IMF programme. It said the IMF Pakistan programme is progressing in the right direction.