India to ask global funding agencies to review loans, grants to Pak: Source

India will be asking global multilateral agencies, including the IMF, to have a relook at funds and loans provided to Pakistan, as New Delhi seeks to corner the neighbouring state diplomatically following the dastardly terror attack in Pahalgam last month which killed 26 tourists.

"We will be asking all multilateral agencies to review the loans and support to Pakistan," a government source said.

Also Read: India plans 2-pronged financial strike against Pak to curb terror funding: Report

Authorities have identified five terrorists — including three Pakistani nationals — behind the massacre in Pahalgam.

Defence Minister Rajnath Singh on Thursday (May 1) termed Pakistan a rogue state that has been fuelling global terrorism. Meanwhile, Home Minister Amit Shah said the terrorists who carried out the “cowardly” Pahalgam terror attack would not be spared.

IMF to meet Pak officials on May 9

The IMF Executive Board is scheduled to meet Pakistan officials on May 9 for the first review of the extended funding facility, and request for an arrangement under the resilience and sustainability facility.

Also Read: India’s response to Pahalgam attack should avoid regional conflict: JD Vance

The IMF Board will evaluate fresh USD 1.3 billion arrangement for Pakistan under its climate resilience loan programme. It will also assess an ongoing USD 7 billion bailout package.

ADB’s loans and grants

As of December 31, 2024, the Asian Development Bank (ADB) has committed 764 public sector loans, grants, and technical assistance totalling USD 43.4 billion to Pakistan. ADB’s current sovereign portfolio in Pakistan includes 53 loans and 3 grants worth USD 9.13 billion.

ADB committed a USD 320 million loan for the Khyber Pakhtunkhwa Rural Roads Development Project to upgrade around 900 kms of flood-susceptible rural roads in the province.

Also Read: US reiterates ‘full support’ for India, calls for ‘responsible resolution’ to Pahalgam attack

In January 2025, the World Bank approved a USD 20 billion-lending package to Pakistan for the cash-strapped country to overcome its challenges. The IMF bailout is critical for Pakistan, which said it helped it overcome a default threat.

FATF’s ‘grey list’

India is simultaneously making all efforts to get Pakistan placed on the ‘grey list’ of the Financial Action Task Force (FATF), the international money laundering and terror financing watchdog.

When a country is placed on the grey list, it adversely impacts the flow of capital and Foreign Direct Investment (FDI) since business have to ensure enhanced due diligence.

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Pakistan was put on FATF’s grey list in June 2018, and was removed from the list in October 2022 after it made a commitment to curb the funding of terrorism. If Pakistan is placed on the grey list again, there will be increased scrutiny on its financial flows.

India will need the support of other FATF member-nations to begin the process of reinstating Pakistan on the grey list. The plenary is the decision-making body of the FATF, and its next meeting is in June.

(With agency inputs)