Pakistan met all economic targets, EFF decisions taken by consensus: IMF
The International Monetary Fund (IMF) on Friday said that its executive board approved funding for Pakistan after the country “met all the targets” under the Extended Fund Facility (EFF) programme, adding that the loan programme for Islamabad was only for stabilisation of foreign exchange reserves and not related to the budget financing.
Despite Indian attempts to derail Pakistan’s loan programme, the IMF approved the immediate disbursement of about $1 billion to Pakistan under the ongoing EFF and allowed an additional arrangement for the $1.4bn Resilience and Sustainability Facility (RSF).
During a press briefing in Washington D.C., IMF Director of the Communications Department, Julie Kozack, said, “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.”
An Indian journalist asked the spokesperson on the recent bailout package by IMF to Pakistan, saying “the Indian government has expressed a lot of displeasure with Pakistan planning to use this package to build—rebuild—areas that allegedly support cross-border terrorism.” She also asked a question related to the “majority vote that was received in approving this bailout package for Pakistan on May 9.”
Another journalist asked about the implications of the escalation between Pakistan and India on both economies, while another questioned what “safeguards the IMF has that its funds won’t be used for military or in support of military actions.” The journalist also asked about the controversy about the termination of India’s IMF Executive Director, KV Subramanian.
In response to the questions, Kozack said the IMF’s Executive Board approved Pakistan’s EFF programme in September of 2024.
“The first review at that time was planned for the first quarter of 2025. And consistent with that timeline, on March 25th of 2025, the IMF Staff and the Pakistani authorities reached a Staff-Level Agreement on the First Review for the EFF,” she said.
She added that the agreement was then presented to the Fund’s Executive Board, which completed the review on May 9. “As a result of the completion of that review, Pakistan received the disbursement at that time,” she said.
Kozack explained that the global money-lender had a standard procedure in place under its programmes which allowed its executive board to conduct periodic reviews of lending programs to assess countries’ progress. The board, she said, particularly looked at whether the programme was on track, whether the conditions under the programme were met, and whether any policy changes were needed to bring the programme back on track.
She then said that Pakistan’s programme was approved after the country successfully met all of the required targets.
Regarding the question on safeguards, she clarified that IMF financing was provided to members for the purpose of resolving balance of payments problems, therefore, in the case of Pakistan, all the disbursements received under the EFF were 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.
The IMF spokesperson added the programme provides additional safeguards through conditionality that includes targets on the accumulation of international reserves.
“It includes a zero target, meaning no lending from the central bank to the government. And the programme also includes substantial structural conditionality around improving fiscal management,” she said, adding that any deviation from the established programme conditions would impact future reviews.
Kozack said that the appointment and resignation of an executive board member was the prerogative of any country, and it was completely up to the country’s authorities to determine who represented them at the Fund.
On the Pakistan-India tension, Kozack expressed regrets and sympathies for the loss of life and hoped for a peaceful resolution of the conflict.
Earlier this month, the IMF had approved two major financing arrangements for the country — a $1 billion disbursement under the EFF and a new RSF aimed at supporting climate-related initiatives.
In a statement, the IMF said its Executive Board completed the first review of Pakistan’s economic reform programme supported by the EFF Arrangement.
“This decision allows for an immediate disbursement of around $1bn (SDR or special drawing rights 760 million), bringing total disbursements under the arrangement to about $2.1bn (SDR 1.52bn). In addition, the IMF Executive Board approved the authorities’ request for an arrangement under the RSF, with access of about $1.4bn (SDR 1bn),” it said.
It noted that Pakistan’s policy efforts under the EFF had already delivered “significant progress” in stabilising the economy and rebuilding confidence, amidst a challenging global environment.
“Fiscal performance has been strong, with a primary surplus of two per cent of gross domestic product achieved in the first half of FY25, keeping Pakistan on track to meet the end-FY25 target of 2.1pc of GDP. Inflation fell to a historic low of 0.3pc in April, and progress on disinflation and steadier domestic and external conditions, have allowed the State Bank of Pakistan to cut the policy rate by a total of 1100 bps since June 2025. Gross reserves stood at $10.3bn at end-April, up from $9.4bn in August 2024, and are projected to reach $13.9bn by end-June 2025 and continue to be rebuilt over the medium term.”
Meanwhile, it said the RSF would support the authorities’ efforts to reduce vulnerability to natural disasters and build economic and climate resilience.
President lauds IMF programme’s role in Pakistan’s economic stability
In a separate development on Friday, President Asif Ali Zardari held a meeting with a delegation of the International Monetary Fund (IMF), led by the Director of the Middle East and Central Asia Department Jihad Azour, highlighting the Fund’s positive role in promoting economic development in developing nations.
Discussing Pakistan’s current economic situation and the ongoing IMF programme, the president acknowledged and appreciated the IMF’s contribution to Pakistan’s economic progress, according to the state-run Associated Press of Pakistan (APP).
The delegation members expressed satisfaction over Pakistan’s efforts for economic reforms and implementation of the IMF programme, which they observed was progressing in the right direction.
“The delegation further emphasised that the programme assisted in reducing inflation and fiscal deficit and strengthening Pakistan’s foreign exchange reserves,” per the report.
President Zardari thanked the IMF for its continued support and cooperation with Pakistan and also appreciated the finance ministry for its efforts to improve the national economy, it added.
A day prior, Prime Minister Shehbaz Sharif had also held a meeting with the delegation, reaffirming his government’s commitment to fast track institutional reforms alongside macroeconomic stabilisation, asserting that Pakistan was now firmly on the path to economic development.
“Pakistan is now moving from economic stability toward sustainable growth,” the prime minister had said, emphasising that the government’s top priority was not only to sustain macroeconomic gains but to expedite comprehensive institutional reforms, crucial for long-term resilience.
Additional reporting by Nadir Guramani.