India’s approach to intensifying economic pressure on Pakistan: Path towards FATF grey listing and cancellation of IMF debt
In the backdrop of deteriorated India-Pakistan relations, India has proactively moved at outstanding worldwide structures to put more financial pressure on Pakistan: Call for the return of Pakistan to the FATF (Financial Action Task Force) grey listing and make contact for the scrutiny of Pakistan’s IMF (International Monetary Fund) debt.
Call for Pakistan’s re-entry into FATF grey list
India has intensified efforts to bring Pakistan back into the FATF gray entry toward raising guides from global networks. It comes after a terrorist attack in Pahalgam, Jammu and Kashmir, which made 26 Indian travelers lifeless. India has accused Pakistan of sponsoring terrorist companies such as Jai-E-Mohammed and Lashkar-E-Tabiba, which perform such attacks.
India’s view is that Pakistan’s reevaluation within the FATF Gray List will be limited by receiving international financial assistance and limiting terror financing. India has been supported by the United States, the United Kingdom, France, Germany, Australia, Saudi Arabia, the United Arab Emirates, and the EU with the help of 23 FATF memberships.
Call for review of IMF loans
India has asked the International Monetary Fund (IMF) to reconsider Pakistan’s IMF loans. India’s Foreign Secretary Vikram Misri stated that India’s Executive Director within the IMF will improve India’s attitude on Pakistan’s loans. This movement can further exacerbate Pakistan’s monetary disaster, as Pakistan has already been given a bailout package of $7 billion by the IMF. If Pakistan is in trouble with monetary aid from the IMF, its financial condition can similarly deteriorate.
India’s move and Pakistan’s reaction
India’s move is to apply pressure on Pakistan so that it takes tangible actions against terrorism and makes attempts to better its image before the international community. Pakistan has resisted these steps and termed it India’s unilateral move. Pakistan is going to raise this issue in the United Nations Security Council.
Possible economic implications
If FATF places Pakistan on the grey list over again, Pakistan will find it tough to reap investment from international financial institutions. This should result in a decline in the value of Pakistan’s forex and rupee and diminish the self-belief stage of overseas buyers. Besides this, the import rate of important items for Pakistan should upward thrust, which could, in addition, improve inflation.
Difficulty in getting financial help from the IMF can also further deteriorate Pakistan’s economic situation, which can boost unemployment, poverty, and social inequality.
Conclusion
This movement of India is a sizable step closer to developing worldwide strain on Pakistan and inspiring it toward taking concrete actions in opposition to terrorism. Even though this movement can similarly boost tension among the 2 nations, it promises a message to the world that concrete action in opposition to terrorism needs to be taken.
India and Pakistan should clear up their problems through negotiations and diplomacy and cooperate for nearby peace and stability.
May 25, 2025