NEW DELHI: In response to the recent Pahalgam terror attack, India is preparing to launch a diplomatic campaign aimed at cutting off Pakistan’s access to international financial support. Accusing Islamabad of supporting terrorism, New Delhi plans to push multilateral institutions—including the International Monetary Fund (IMF), World Bank, and Asian Development Bank—to reassess ongoing and future funding to Pakistan.
A senior government official said India would call for a review of the financial facilities recently extended to Pakistan, particularly the IMF’s support intended to prevent an economic collapse. Efforts are also underway to persuade the Financial Action Task Force (FATF) to reinstate Pakistan on its “grey list” for increased scrutiny over terror financing concerns.
Halting international funding could significantly impact Pakistan’s already fragile economy. Last year, the country secured a $7 billion bailout from the IMF, followed by a $1.3 billion climate resilience loan in March. The IMF’s executive board is scheduled to meet with Pakistani officials on May 9 for the first review under its extended funding arrangement and to consider a request under the Resilience and Sustainability Facility.
“IMF must reassess its engagement with Pakistan in light of the April 22 Pahalgam attack, the deadliest targeting Indian civilians since the 2008 Mumbai attacks,” said a policy paper by Soumya Bhowmick of the Observer Research Foundation (ORF). “Continued financial assistance without strict conditions addressing Pakistan’s terror links undermines economic reform goals. Counter-terror measures and accountability must be embedded in aid programs to ensure financial support does not inadvertently sustain regional instability.”
Earlier this year, in January 2025, the World Bank approved a $20 billion aid package for Pakistan to help the country navigate its economic and development challenges.
