https://arab.news/wj4f3
- IMF communications director says the board approved funding as Pakistan had 鈥榤et all of the targets鈥�
- She clarifies EFF disbursements go to the central bank and are not used to fund the national budget
KARACHI: The International Monetary Fund (IMF) this week defended its decision to release a $1 billion tranche to Pakistan, despite India鈥檚 concern over its potential misuse, by pointing out the country had met all requisite targets under the Extended Fund Facility (EFF).
India had raised objections to the IMF鈥檚 disbursement amid a military confrontation with Pakistan, saying the funds could be diverted to support activities that it described as detrimental to regional stability. New Delhi abstained from the IMF Executive Board vote on May 9, highlighting apprehensions about the timing and potential implications of the financial assistance.
During a news briefing in Washington on Thursday, IMF Communications Director Julie Kozack addressed these concerns, saying the international lender provided financing to member states for the purpose of resolving balance of payments problems.
鈥淚n the case of Pakistan 鈥� the EFF disbursements 鈥� are allocated to the reserves of the central bank,鈥� she said. 鈥淯nder the program, those resources are not part of budget financing 鈥� [and] are not transferred to the government to support the budget.鈥�
The IMF official further emphasized the Fund鈥檚 decision was based on Pakistan meeting all the targets set under the loan program.
鈥淥ur Board found that Pakistan had indeed met all of the targets,鈥� she continued. 鈥淚t had made progress on some of the reforms, and for that reason, the Board went ahead and approved the program.鈥�
Kozack also outlined the safeguards to prevent any potential misuse of funds, including targets on the accumulation of international reserves and a zero target for central bank lending to the government.
She also noted the program includes substantial structural conditionality aimed at improving fiscal management.
The IMF鈥檚 disbursement this month was part of a broader $7 billion support program aimed at stabilizing Pakistan鈥檚 economy. The Fund has said future disbursements will depend on Pakistan鈥檚 continued adherence to the program鈥檚 conditions and reforms.