Pakistan ‘met all targets’, received board consensus for fund release: IMF

Reaffirming its confidence in Pakistan’s economic reform, the International Monetary Fund (IMF) stated that its Executive Board approved funding for the country after it “met all the targets” under the Extended Fund Facility (EFF) programme.

Speaking to reporters on Thursday, the International Monetary Fund’s spokesperson, Julie Kozack, clarified that the Fund’s disbursements are strictly allocated to Pakistan’s central bank (State Bank of Pakistan) reserves and are subject to robust safeguards and conditionalities.

“It is part of a standard procedure under programs that our Executive Board conducts periodic reviews of lending programs to assess their progress. And they particularly look at whether the programme is on track, whether the conditions under the programme have been met, and whether any policy changes are needed to bring the programme back on track.

“And in the case of Pakistan, our Board found that Pakistan had indeed met all of the targets. It had made progress on some of the reforms, and for that reason, the Board went ahead and approved the programme,” she said.

Kozack’s remarks came amid questions regarding Board dynamics and Pakistan’s recent conflict with India.

On the appointment of the Indian Executive Director at the IMF, the Fund’s spokesperson said, “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”.

On the recent Pakistan-India conflict, Kozack expressed “regrets and sympathies for the loss of life and the human toll from the recent conflict”.

“We do hope for a peaceful resolution of the conflict,” she said.

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Elaborating on the IMF’s ongoing programme with Pakistan, Kozack said that the IMF Executive Board approved Pakistan’s EFF program in September of 2024.

“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, the 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.”

Regarding how decisions are made at the IMF, she explained that the Board typically operates by consensus, and individual votes are not made public.

“In general, Fund Board decisions are taken by consensus, and in this (Pakistan) 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,” the spokesperson said.

Concerning the question on safeguards, Kozack highlighted that the IMF funding is used by countries to resolve balance of payments issues, not for general budget spending.

“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. So, those disbursements are at the central bank, and under the program, those resources are not part of budget financing. 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.”

Moreover, the programme also includes substantial structural conditionality around improving fiscal management, she said.

“These conditions are all available in the programme documents if you want to do a deeper dive. And, of course, any deviation from the established program conditions would impact future reviews under the Pakistan programme.”