IMF Addresses Concerns Over Pakistan’s Financial Aid Usage

The International Monetary Fund (IMF) recently clarified that Pakistan is not permitted to misuse the financial assistance provided through its Extended Fund Facility (EFF) designed to tackle balance of payments issues. Alongside this, India has expressed apprehensions about the timing of this support, linking it to Pakistan’s military maneuvers.

On Thursday, IMF Communications Chief Julie Kozack informed the press that there are strict safeguards in place to prevent the misuse of funds, which include monitoring against fraudulent government payments. She emphasized adherence to the program’s objectives, particularly surrounding improved fiscal management to remedy Pakistan’s balance of payments difficulties.

Kozack also mentioned that the Executive Committee regularly evaluates the lending program to determine if any policy adjustments are necessary to keep it on course. She stated, “Our board of directors concluded that Pakistan meets all its targets and is advancing on certain reforms, which led to the program’s approval.”

This explanation comes in light of India’s concerns following terrorist incidents in Pahargam and increased military activity from Pakistan. Reportedly, India’s Finance Minister Nirmala Sitharaman reached out to IMF Managing Director Kristalina Georgieva, urging a halt to the financial assistance directed to Pakistan.

Georgieva reportedly highlighted the timing of these disbursements, raising questions about the appropriateness of support while Pakistan’s military had been conducting operations against military and civilian targets in Western India.

It’s been reported that Indian officials conveyed to the IMF data suggesting a rise in arms procurement in Pakistan after receiving international financial aid. The trend indicated a more than 20% increase in arms imports from 1980 to 2023 during years when funding was received.

The IMF has disbursed around $2.3 billion as part of a broader $7 billion EFF agreement, yet the Indian government has questioned these expenditures. Recently, Defense Minister Rajnath Singh characterized the support as potentially enabling Pakistan’s terrorism efforts.

However, the IMF noted that the EFF was originally approved in September 2024 and the first progress review occurred in March 2025, shortly before the Pahargam attack. Payments were issued following this review in May.

In addition, India plans to engage the World Bank regarding a potential rapid tracking of an estimated $20 billion over the next decade, as well as to communicate with the Financial Action Task Force about placing Pakistan back on the “gray list.”