India Set To Mount Pressure On FATF To Add Pakistan To Grey List

India will be looking forward to raising the issue of Pakistan's terrorism involvement and will seek the reinclusion of Islamabad in the Financial Action Task Force (FATF) greylist, Reuters reported, citing a top government source.

Pakistan was removed from the grey list in 2022 which had come as a boost to its trouble-hit economy. India will be also opposing the World Bank funding for Pakistan

The World Bank is preparing to approve a substantial $20 billion loan package for Pakistan in June. This funding is part of a broader 10-year initiative titled the "Pakistan Country Partnership Framework 2025-35", aimed at tackling key development issues such as child stunting, poor education outcomes, climate resilience, and encouraging private sector investment while expanding fiscal capacity.

The Modi administration is displeased with the $2.4 billion bailout granted to Pakistan by the International Monetary Fund (IMF) on May 9. Nonetheless, the government has expressed appreciation for the IMF's decision to attach 11 stringent conditions to the next instalment of the package.

These new conditions include parliamentary clearance for a Rs 17.6 trillion federal budget, increased electricity surcharges for debt servicing, and lifting the ban on older used car imports.

The IMF's staff-level assessment also cautioned that: "Rising tensions between India and Pakistan, if sustained or deteriorate further, could heighten risks to the fiscal, external and reform goals of the programme."

What IMF Says?

In its defense, the IMF has stated that the loan was approved after Pakistan met all the necessary benchmarks.

Julie Kozack, Director of the IMF's Communications Department, clarified to BT TV: "I want to make three important points to help you understand this. IMF financing is meant to resolve balance of payments issues only. All EFF disbursements to Pakistan go directly to the central bank's reserves. These funds are not used for government budget financing. There is a zero limit on lending from the central bank to the government. The programme includes structural reforms to improve fiscal management."

The FATF grey list includes countries that are under enhanced surveillance. Being on the list indicates a nation has "committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring". Currently, 25 nations fall under this category of FATF's "jurisdictions under increased monitoring".