‘Our board was satisfied that Pakistan met all conditions’: IMF defends bailout package 

The International Monetary Fund (IMF) on May 22 defended its bailout package to Pakistan saying its board was satisfied that Pakistan had indeed met all the targets as laid down by the global body to meet the funding criteria. 

Responding to a question by Business Today TV at its press briefing, the IMF said, it approved Pakistan’s EEF programme in September 2024 and the first review at that time was planned for the first quarter of 2025. 

Our executive board completed the review on May 9, and as a result of the completion of that review, Pakistan received the disbursement, it said. 

It is part of a standard procedure under programmes that our executive board conducts periodic reviews of lending programs to assess their progress, and they particularly look at whether the program 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, the agency added. 

“In the case of Pakistan, our board was satisfied that Pakistan had indeed met all of the targets,” the IMF said, adding there was sufficient consensus to move forward and complete Pakistan’s review. 

Speaking to BT TV, Julie Kozack, Director, IMF Communications Department, said, “I want to make three important points to help you understand this. IMF financing is meant to resolve balance of payments issues only. All EFF disbursements to Pakistan go directly to the central bank’s reserves. These funds are not used for government budget financing. There is a zero limit on lending from the central bank to the government. The programme includes structural reforms to improve fiscal management.” 

“Any deviation from these conditions will affect future IMF reviews,” she added. 

The Executive Board of the IMF on May 9 decided to allow for “an immediate disbursement” of $1 billion (around Rs 8,500 crore) to Pakistan. This disbursal was done as part of IMF’s Extended Fund Facility (EFF) to Pakistan. 

The 37-month EFF was approved on September 25, 2024, and provides for a total disbursement of $7 billion to Pakistan. The latest tranche brings the total disbursements under the arrangement so far to about $2.1 billion.  

IMF also said that it expresses regret on the loss of life and human toll between India and Pakistan and hopes for peaceful resolution of the conflict. 

With respect to Krishnamurthy Subramanian’s termination, who was India’s Executive Director at the IMF, the global body said the appointment of executive director is a matter of the member country and not of the IMF. 

The IMF has slapped 11 new conditions on Pakistan for the release of the next tranche of its bailout programme and warned that tensions with India could heighten risks to the scheme’s fiscal, external, and reform goals. As per reports, the addition of 11 more conditions takes the total conditions to 50 as of now.