Amidst escalating tensions, India has formally requested the International Monetary Fund (IMF) to reassess the loans granted to Pakistan, signaling a significant diplomatic move to pressure its neighbor. This request comes in the wake of a recent terror attack in Kashmir, which resulted in the death of 26 Hindu tourists, further straining the already fragile relationship between the two nations.
New Delhi has accused Pakistan of supporting the attack, identifying the perpetrators as Pakistani nationals, while Islamabad has vehemently denied these allegations and called for an independent investigation. The incident has led to a series of retaliatory measures, including the suspension of a major river water-sharing treaty and airspace restrictions, raising concerns about a potential military confrontation between the two nuclear-armed countries.
Pakistan’s economy, heavily reliant on international financial assistance, secured a $7 billion bailout package from the IMF last year, with an additional $1.3 billion loan approved in March to bolster climate resilience. These funds are crucial for stabilizing Pakistan’s $350 billion economy and averting a potential default.
India’s decision to call for a review of these loans reflects its growing concern over Pakistan’s alleged failure to control cross-border terrorism. Sources within the Indian government indicate that they will also approach other international funding agencies such as the World Bank and the Asian Development Bank (ADB) to scrutinize their financial support to Pakistan. Furthermore, India aims to reinstate Pakistan on the Financial Action Task Force (FATF) grey list, intensifying pressure on Islamabad to dismantle its terror networks.With the IMF Executive Board scheduled to meet and discuss the extended funding facility for Pakistan, India’s request adds another layer of complexity to the already tense situation. The move underscores India’s determination to use diplomatic and economic levers to address its security concerns and hold Pakistan accountable for its alleged support for terrorism.