New Delhi: India is making all-out efforts to isolate Pakistan on the international stage, while also working to halt development-related funding and bailout packages from multilateral agencies and nations. Sources told ANI that Finance Minister Nirmala Sitharaman urged Asian Development Bank (ADB) President Masatsugu Asakawa in Milan on Monday to suspend all forms of funding to Pakistan.
As of 2024, the ADB’s sovereign portfolio in Pakistan consists of 53 loans and 3 grants, totaling USD 9.13 billion.
India is also expected to raise concerns with the International Monetary Fund (IMF) regarding Pakistan’s ongoing bailout package. The IMF board is scheduled to review the arrangement in its meeting on May 9, according to its website.
Diplomatic ties between India and Pakistan have sharply deteriorated following the April 22 terrorist attack on tourists in Jammu and Kashmir’s Pahalgam, which killed 26 people and injured several others, mostly tourists.
Sources further told ANI that India is seeking to economically weaken Pakistan by cutting off its access to international funds. To this end, India will approach the Financial Action Task Force (FATF) to include Pakistan in the grey list. Being placed on the FATF grey list would make it more difficult for Pakistan to attract bailout funds or finance development projects.
Separately, during a meeting with Italian Finance Minister Giancarlo Giorgetti on Monday, Finance Minister Sitharaman requested that Italy suspend all forms of financial support to Pakistan. This move is part of India’s broader strategy to impose punitive measures against Islamabad.
Reportedly, India is also engaging with other European nations to push for stricter oversight on international funding to Pakistan. Going forward, India is likely to formally approach additional countries to demand a halt to financial support to Pakistan.
Meanwhile, credit rating agency Moody’s warned in a report on Monday that sustained tensions between India and Pakistan could impair Pakistan’s access to external financing and put pressure on its foreign exchange reserves. The report noted that Pakistan’s reserves remain significantly below the level required to meet its external debt obligations over the next few years.
Conversely, the same Moody’s report painted a positive outlook for India, citing stable macroeconomic conditions supported by strong public investment, resilient private consumption, and continued, though moderating, economic growth.
Moody’s also cautioned that further escalation in tensions with India could hamper Pakistan’s economic growth and delay its fiscal consolidation efforts, undermining the country’s progress toward macroeconomic stability.
In a strong retaliatory step following the Pahalgam attack, India has suspended the Indus Waters Treaty of 1960. Prime Minister Narendra Modi has also granted full autonomy to the armed forces to determine the nature, timing, and targets of India’s response against what it refers to as a terror-harboring nation.
