Pakistan met all conditions: IMF on financial assistance to Islamabad

Washington: The International Monetary Fund (IMF) has said its executive board granted USD one billion in assistance to Pakistan this month after finding out that the country met all conditions and targets for it.

The IMF carried out a review of its extended fund facility (EFF) granted to Pakistan in September last year and based on it, the board approved the amount on May 9, said Julie Kozack, a director at global body's communications department.

The IMF executive board approved the fresh assistance to Pakistan notwithstanding New Delhi's apprehensions that the funds could be used for cross-border terrorism.

India's Defence Minister Rajnath Singh on May 16 pressed the IMF to reconsider the financial assistance, saying Islamabad could use a large part of it to fund the terrorist infrastructure.

At a media briefing Kozack, answering a question, said the IMF executive board approved Pakistan's EFF programme in September last year and the first review at that time was planned for the first quarter of 2025.

The fresh assistance was granted following completion of the review, she said.

At the same time, Kozack said any deviation from the established programme conditions would impact future reviews under the Pakistan programme.

"What I want to emphasise here is that it is part of a standard procedure under programs that our executive board conducts periodic reviews of lending programmes to assess their progress," she said.

"And they particularly look at whether the programme is on track, whether the conditions under the programme have been met, and whether any policy changes are needed to bring the programme back on track."

"And in the case of Pakistan, our Board found that Pakistan had indeed met all of the targets. It had made progress on some of the reforms, and for that reason, the board went ahead and approved the programme," the IMF official said.

On the use of funds, Kozack said the IMF financing is provided to members for the purpose of resolving balance of payments problems.

Generally explaining the case of Pakistan, she said all of the disbursements received under the EFF are allocated to the reserves of the central bank.

"So, those disbursements are at the central bank, and under the programme, those resources are not part of budget financing. They are not transferred to the government to support the budget," she said.

Kozack said the EFF programme provides additional safeguards through "our conditionality".

"And these include, for example, targets on the accumulation of international reserves. It includes a zero target, meaning no lending from the central bank to the government," she said.

"And the programme also includes substantial structural conditionality around improving fiscal management."