Pakistan is Not Using Loan Programs to Conduct Military Operations Against India: IMF

The International Monetary Fund (IMF) has firmly dismissed concerns based by Indian media that its recent disbursement to Pakistan under the Extended Fund Facility (EFF) could be used for military operations against India. During a press briefing, IMF Communications Director Julie Kozack clarified that all funds disbursed under the EFF are strictly allocated to Pakistan’s central bank reserves and are not transferred to the government for budgetary spending. “IMF financing is provided to resolve balance of payments issues and is not intended for military use,” Kozack said, adding that the program includes stringent safeguards to ensure compliance. These safeguards include prohibiting central bank lending to the government, targets for reserve accumulation, and comprehensive structural reform conditions to improve fiscal management. Any deviation from these benchmarks, she warned, could jeopardize future disbursements. India had voiced objections over Pakistan potentially using IMF resources to rebuild areas allegedly involved in cross-border terrorism. However, the IMF clarified that such use would fall outside the scope of its lending program and is effectively prevented by built-in bailout constraints. Kozack also addressed other geopolitical tensions and expressed regret over the human cost of the recent escalation between Pakistan and India. She voiced hope for a peaceful resolution. Detailing the timeline of the IMF’s engagement with Pakistan, Kozack explained that the current program was approved by the Executive Board in September 2024. A staff-level agreement on the first review was reached in March 2025, and the Board formally approved the review on May 9, unlocking the disbursement. Regarding governance, she noted that the Executive Board does not publicly disclose vote counts, but decisions are typically made by consensus. In this instance, sufficient consensus existed for the Board to approve Pakistan’s review. When asked about the recent departure of India’s Executive Director at the IMF, K.V. Subramanian, Kozack stated that the appointment of Executive Directors is a matter solely for the member country and not within the Fund’s purview.