The International Monetary Fund (IMF) has firmly rejected allegations that Pakistan could use its loan funds to support cross-border violence, emphasising that its financial assistance is strictly aimed at stabilising the country’s foreign exchange reserves and balance of payments, according to media reports.
Julie Kozack, IMF Director of Communications, addressed these concerns during a press briefing amid heightened geopolitical tensions between Pakistan and India. Responding to an Indian journalist’s provocative question, Kozack categorically denied any misuse of IMF funds for government expenditures or military activities.
She clarified that IMF disbursements are deposited directly into the State Bank of Pakistan’s reserves, not the federal treasury, and that Pakistan’s borrowing from the central bank currently stands at zero, in compliance with IMF conditions.
Kozack highlighted that Pakistan has met all the economic targets under its current Extended Fund Facility (EFF) programme, which began in September 2024. The recent loan instalment released on May 9 was approved purely based on Pakistan’s economic performance. She further explained that any deviation from the agreed programme conditions—including borrowing from the central bank or failure to meet structural benchmarks—would jeopardise future programme reviews and disbursements.
Elaborating on the programme’s safeguards, Kozack noted that all IMF financing for Pakistan is designated for balance of payments support and is not to be used for budget financing. The EFF programme includes targets to maintain international reserves and enforce strict fiscal management reforms.
Regarding the presence of the Indian executive director at the IMF, Kozack stated that such appointments are decided by member countries and are not within the Fund’s jurisdiction.
Expressing sympathy for the recent conflict’s human toll, Kozack voiced hope for a peaceful resolution between the two nuclear-armed neighbors. She outlined the timeline of the programme’s approval and review, noting that the IMF staff and Pakistani authorities reached a staff-level agreement on the first review in March 2025, which the Executive Board finalised in May, leading to the loan disbursement.
