Islamabad : The International Monetary Fund (IMF) has firmly defended its recent loan disbursement to Pakistan under the Extended Fund Facility (EFF), pushing back against Indian concerns that the funds could be misappropriated.
In a press briefing on Thursday, IMF spokesperson Julie Kozack confirmed that the IMF Executive Board had approved a new $1.4 billion climate resilience loan to Pakistan on May 9 and endorsed the first review of its existing $7 billion EFF program, unlocking about $1 billion in immediate funds.
Kozack stressed that the IMF’s financial support is strictly intended for balance of payments needs and is channeled directly to Pakistan’s central bank—not for budget financing or military expenditures.
“The Board approved the disbursement after finding that Pakistan had met all performance targets and made progress on structural reforms,” said Kozack.
“There are also strict safeguards in place,” she added, noting conditions such as a zero limit on central bank lending to the government and enhanced fiscal discipline.
India had raised objections to the IMF’s ongoing support for Pakistan, particularly following an April terrorist attack in Indian Illegally Occupied Jammu and Kashmir (IIOJK) that left 26 people dead. The incident has reignited tensions between the nuclear-armed neighbors, marking the worst escalation in nearly 30 years.
New Delhi had reportedly urged the IMF to conduct a broader review of its financial support to Islamabad and questioned the Fund’s oversight. It also removed its executive director from the IMF, a move Kozack declined to comment on, stating such decisions fall under the jurisdiction of individual member states.
In her closing remarks, Kozack offered condolences for the lives lost in recent hostilities and urged both countries to pursue a peaceful resolution.
Following the May 9 review, total disbursements to Pakistan under the EFF now stand at $2 billion. The climate resilience loan, though approved, has not yet resulted in immediate disbursal of funds.
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In a statement, the IMF highlighted the progress Pakistan has made under the program, despite global economic headwinds.
“Pakistan’s policy efforts under the program have already delivered significant progress in stabilizing the economy and rebuilding confidence,” the Fund noted.
Meanwhile, a senior Indian government official told Reuters on Friday that New Delhi would now lobby the Financial Action Task Force (FATF) to reinstate Pakistan on its “grey list” and oppose future World Bank financing to Islamabad.
“We will not miss any opportunity in opposing Pakistan and the next one is funding by the World Bank,” the source said.
Pakistan’s finance ministry has not yet issued a comment on the developments. Islamabad has denied involvement in the Kashmir attack and condemned India’s recent decision to suspend the Indus Waters Treaty as a provocation.
Pakistan was removed from the FATF grey list in 2022, a move that had helped boost investor confidence and secure vital international support for its struggling economy.
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