New Delhi, May 5 — India has stepped up its efforts to diplomatically and economically isolate Pakistan following the April 22 terrorist attack in Pahalgam that killed 26 people, most of them tourists, and left several others injured.
In a high-level push to curb Pakistan’s access to international finance, Finance Minister Nirmala Sitharaman on Monday urged Asian Development Bank (ADB) President Masatsugu Asakawa in Milan to suspend all funding to Islamabad, according to sources cited by ANI. As of 2024, ADB’s sovereign lending portfolio in Pakistan includes 53 loans and three grants totaling $9.13 billion.
India is also preparing to raise objections over Pakistan’s upcoming bailout review by the International Monetary Fund (IMF), scheduled for May 9. According to IMF’s website, the board will assess Pakistan’s financial assistance package during its upcoming meeting.
Further tightening the pressure, New Delhi is expected to approach the Financial Action Task Force (FATF) to push for Pakistan’s re-inclusion in the grey list—a move that could severely impact its ability to access global funding.
“Placing Pakistan back on the grey list would raise scrutiny and make it difficult for the country to secure external financial support or advance development projects,” a senior official said.
Diplomatic sources told ANI that Sitharaman also urged her Italian counterpart, Finance Minister Giancarlo Giorgetti, to stop all forms of financial support to Pakistan.
“India continues to engage with key global players to curtail financial avenues that indirectly or directly support terrorism,” one official said.
Efforts are also underway to coordinate with European nations to impose stricter oversight on the flow of international funds into Pakistan.
Officials indicated that India may soon formally petition other countries to halt development financing to the neighbouring country.
Moody’s Investors Service added to the warnings on Monday, stating that rising tensions with India are likely to “impair Pakistan’s access to external financing and exert further pressure on its foreign-exchange reserves.”
The agency noted Pakistan’s reserves remain far below the levels needed to cover its debt obligations in the coming years.
While Pakistan faces deepening financial uncertainty, Moody’s painted a relatively optimistic outlook for India.
“India’s macroeconomic conditions are stable, supported by strong public investment, resilient private consumption and moderating but high growth,” the agency said.
Following the Pahalgam attack, India not only downgraded diplomatic relations with Islamabad but also suspended the Indus Waters Treaty of 1960.
Prime Minister Narendra Modi has reportedly given full operational autonomy to the armed forces to determine the timing, scale, and nature of India’s response.
