Islamabad, May 23, 2025: In a decisive move, the International Monetary Fund (IMF) has refuted allegations from Indian media suggesting that Pakistan might misuse its latest bailout funds for military activities.
The global lender clarified that the funds granted under the Extended Fund Facility (EFF) are strictly designated for bolstering Pakistan’s foreign exchange reserves—not for defense spending.
At a recent press briefing, IMF Communications Director Julie Kozack set the record straight:
“IMF financing is provided to resolve balance of payments issues and is not intended for military use,” she stated.
Kozack emphasized that the IMF has placed robust safeguards on its funding. These include a ban on central bank lending to the government, strict reserve accumulation targets, and a series of fiscal reforms that Pakistan must adhere to. Any deviation could risk future financial support.
These statements come in response to Indian concerns that Pakistan could potentially use the disbursement to rebuild areas linked with cross-border tensions.
However, the IMF underscored that its funds are ring-fenced by policy conditions to prevent any such misuse. As part of the program’s framework, all disbursed amounts remain with Pakistan’s central bank and are not accessible for direct government expenditures.
Julie Kozack also expressed concern over the escalating India-Pakistan tensions, noting the humanitarian impact of such conflicts. “We hope to see a peaceful path forward,” she said.
Providing a timeline, she added that the current IMF program with Pakistan was approved by the Executive Board in September 2024, with the first review concluded and disbursement approved on May 9, 2025, following a staff-level agreement in March 2025.
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On governance transparency, Kozack pointed out that while vote counts are not disclosed, the decision to approve the disbursement was reached through sufficient consensus among IMF board members. She also addressed the exit of India’s IMF Executive Director K.V. Subramanian, clarifying that such appointments are entirely under national jurisdiction.
