India To Object To World Bank, FATF Over Pakistan Funding Amid Security Concerns: Government Sources

In a strong diplomatic move, India is set to raise formal objections with the World Bank over its proposed $20 billion lending package to Pakistan, which is expected to be cleared in June 2025, top government sources said.

This stance follows New Delhi’s earlier objection to the $1.3 billion loan to Pakistan by the International Monetary Fund, approved on May 9, with India warning that the funds risk being diverted to support terror-related activities rather than economic reform.

In parallel, India is also preparing to escalate the issue at the Financial Action Task Force (FATF), seeking to return Pakistan to the FATF ‘grey list’ for failing to comply with anti-money laundering and counter-terror financing norms. “Pakistan has not taken sufficient action against terror networks operating from its territory, and continues to divert resources towards arms and ammunition,” a top government official said.

FATF is the global watchdog that sets international standards to combat money laundering and terror financing. Pakistan was previously placed on its grey list between 2018 and 2022, which led to heightened scrutiny by international financial institutions, adversely affecting foreign direct investment and capital flows. Businesses were forced to undertake enhanced due diligence, raising transaction costs and deterring investments.

Pakistan was delisted from the FATF grey list in 2022 after it committed to a series of regulatory reforms. However, India argues that these commitments have not been upheld. A detailed dossier is being prepared and is expected to be presented at the next FATF plenary meeting in June 2025, source indicated.

Senior officials also expressed strong disappointment with the IMF’s recent decision, despite India directly flagging concerns to IMF Managing Director Kristalina Georgieva. “India is not against financial aid to any country, but the data suggest that this bailout has come in a war-like situation,” an official said. According to IMF records cited by Indian officials, out of 28 IMF support programs to Pakistan, most have ended up benefitting military spending rather than improving fiscal health.

“India is left to defend itself despite an outrageous violation of our citizens on our soil,” said a source, adding, “India will stand on its own.”

While acknowledging that the IMF has imposed 11 new conditions for Pakistan to qualify for its next tranche, officials remain wary. The next review meeting by the IMF on Pakistan’s bailout programme is scheduled for September.