IMF Affirms Confidence in Pakistan’s Economic Reforms, Approves Funding

The International Monetary Fund (IMF) has expressed its confidence in Pakistan’s economic reform efforts, stating that its Executive Board has sanctioned financial support for the nation. This decision came after acknowledging that Pakistan successfully “met all the targets” set under the Extended Fund Facility (EFF) program.

Julie Kozack, the IMF spokesperson, addressed reporters on Thursday, clarifying that the organization’s financial distributions are specifically designated for Pakistan’s central bank reserves, the State Bank of Pakistan. These allocations are accompanied by stringent safeguards and conditional requirements.

She stated that the Executive Board conducts routine assessments of lending programs to evaluate progress, ensure adherence to conditions, and determine if any policy adjustments are necessary to maintain the program’s trajectory.

According to Kozack, the Board determined that Pakistan had fulfilled all objectives and demonstrated advancement in several reforms, which led to the approval of the program.

Kozack’s statements addressed queries regarding Board dynamics and recent geopolitical issues.

Regarding the appointment of the Indian Executive Director at the IMF, the Fund’s spokesperson clarified that the selection of Executive Directors is the prerogative of the member country and is not determined by the Fund.

Concerning the recent conflict, Kozack conveyed the IMF’s condolences for the loss of life and expressed hope for a peaceful resolution.

Details of the Ongoing Program

Expanding on the IMF’s continuous program with Pakistan, Kozack mentioned that the IMF Executive Board gave the green light to Pakistan’s EFF program in September 2024.

The initial review was scheduled for the first quarter of 2025. Subsequently, on March 25, 2025, IMF Staff and Pakistani officials achieved a Staff-Level Agreement on the First Review for the EFF.

This agreement underwent evaluation by the Executive Board, which concluded the review on May 9, resulting in the disbursement to Pakistan.

Decision-Making Process at the IMF

Kozack elucidated that the Board typically arrives at decisions through consensus, and individual votes remain confidential.

She stated that in the case of Pakistan, there was sufficient agreement among the Board members to proceed and finalize Pakistan’s review.

Safeguards and Utilization of Funds

Kozack emphasized that IMF funding serves the purpose of addressing balance of payments problems and is not intended for general budgetary expenditures.

  • IMF financing is designated to help member countries resolve balance of payments issues.
  • In Pakistan’s instance, all EFF disbursements are directed to the central bank’s reserves and are not utilized for budget financing.
  • The program incorporates additional safeguards through conditionality, encompassing targets for international reserve accumulation and a prohibition on central bank lending to the government.

Additionally, the program includes structural conditionality aimed at enhancing fiscal management.

She cautioned that any non-compliance with the established program conditions would impact future reviews under the Pakistan program.