The International Monetary Fund (IMF) has categorically rejected concerns raised by Indian media suggesting that its recent disbursement to Pakistan under the Extended Fund Facility (EFF) could be diverted for military operations against India.
Addressing the issue during a press briefing, IMF Communications Director Julie Kozack emphasized that all funds provided under the EFF are strictly allocated to Pakistan’s central bank reserves and are not available for government budgetary spending. “IMF financing is provided to resolve balance of payments issues and is not intended for military use,” Kozack stated, highlighting that the program includes robust safeguards to ensure compliance.
These safeguards, she explained, include a prohibition on central bank lending to the government, targets for reserve accumulation, and comprehensive structural reform conditions aimed at improving fiscal management. Kozack warned that any deviation from these benchmarks could jeopardize future disbursements to Pakistan.
Indian authorities had previously expressed concerns that IMF resources might be used by Pakistan to rebuild areas allegedly linked to cross-border terrorism. The IMF, however, clarified that such use is strictly outside the scope of its lending program and is effectively prevented by the program’s built-in constraints.
Kozack also addressed broader geopolitical tensions, expressing regret over the human cost of recent escalations between Pakistan and India and voicing hope for a peaceful resolution.
Providing a timeline of the IMF’s engagement with Pakistan, Kozack noted that the current EFF program was approved by the Executive Board in September 2024. A staff-level agreement on the first review was reached in March 2025, with the Board formally approving the review on May 9, which unlocked the latest disbursement.
On governance matters, Kozack clarified that the IMF Executive Board does not publicly disclose vote counts, as decisions are typically made by consensus. She confirmed that there was sufficient consensus for the Board to approve Pakistan’s review.
Responding to questions about the recent departure of India’s Executive Director at the IMF, K.V. Subramanian, Kozack stated that the appointment of Executive Directors is solely the prerogative of the member country and falls outside the Fund’s jurisdiction.
