India is set to push for international financial sanctions against Pakistan in response to a recent militant attack in Kashmir that killed 26 Hindu pilgrims. A top government source revealed on Friday that New Delhi will lobby the Financial Action Task Force (FATF) to place Pakistan back on its “grey list” and oppose forthcoming funding to Islamabad from the World Bank.
The move comes amid heightened tensions following what India alleges are Pakistan-backed militant operations on its territory. In a series of retaliatory steps, India has also suspended its participation in the Indus Waters Treaty a critical water-sharing agreement between the two nuclear-armed nations. Islamabad has termed this suspension “an act of war” and strongly denied involvement in the Kashmir attack.
Pakistan was removed from the FATF grey list in 2022, a decision that had helped bolster its economic credibility with global lenders. However, the Indian official claimed that Pakistan had failed to fulfill the required conditions for that removal and insisted that the country should be subjected once again to increased international monitoring.
“The next funding move by the World Bank to Pakistan will be opposed,” the source stated, emphasizing India’s determination to challenge Pakistan in all global financial forums. New Delhi has also raised concerns with the International Monetary Fund (IMF), asserting that Pakistan’s military spending tends to rise following IMF loan disbursements.
While the IMF has not commented directly on these allegations, IMF spokesperson Julie Kozack recently confirmed that Pakistan had met its reform targets under a $7 billion bailout program approved last year. The country has also secured an additional $1.4 billion in funding under a climate resilience initiative.
The FATF, IMF, and World Bank have yet to respond to India’s renewed allegations and diplomatic pressure. As geopolitical tensions rise, Indian Prime Minister Narendra Modi issued a stern warning: “Pakistan, its army, and its economy will have to pay a heavy price for every terrorist attack.”
With both nations armed with nuclear capabilities, global observers are closely monitoring the escalating situation for signs of further conflict or diplomatic fallout.
