India is preparing to formally urge the World Bank to reconsider its anticipated approval of a $20 billion lending package to Pakistan, expected to be discussed in June 2025. This move comes in the wake of the recent Pahalgam attack and amid ongoing concerns about Pakistan’s use of international financial aid.

Indian officials argue that such funds, although intended for development and poverty alleviation, have historically been diverted by Pakistan toward military expenditures and arms procurement, rather than being used to improve fiscal health or social indicators.

The $20 billion package is part of the World Bank’s 10-year "Pakistan Country Partnership Framework 2025-35," which aims to address issues like child stunting, learning poverty, climate resilience, and to boost private investment and fiscal space in Pakistan.

However, India’s objection is centered not on the principle of development funding, but on its timing and Pakistan’s track record. Indian government sources have cited IMF data showing that a significant portion of previous international aid to Pakistan has been used for arms and weapons, rather than for genuine economic reform or social welfare.

In parallel, India will also approach the Financial Action Task Force (FATF) to push for Pakistan’s re-inclusion on the FATF grey list during the upcoming review in September. Pakistan was removed from the grey list in October 2022 after pledging to curb terror financing, but Indian officials maintain that Pakistan has not fully met the conditions for its removal and continues to pose concerns regarding terror funding.

India’s stance is further fuelled by its recent disappointment over the IMF’s approval of a $2.4 billion bailout package to Pakistan in May 2025, despite India’s diplomatic efforts to block or delay it.

Indian officials communicated their concerns directly to the IMF’s managing director and finance ministers of key European countries, highlighting the risks of approving such aid during heightened hostilities and border tensions. While India could not prevent the IMF package, it welcomed the imposition of 11 new conditions on Pakistan for the release of future tranches, including stricter fiscal, governance, and social sector reforms.

In summary, India’s diplomatic campaign seeks to tighten international financial scrutiny on Pakistan by:

Urging the World Bank to reconsider the $20 billion development package, citing concerns of fund misuse

Pressing the FATF to return Pakistan to the grey list, which would increase oversight of its financial transactions and restrict foreign investments

Continuing to highlight the risks of international aid being diverted toward military purposes rather than genuine development

This strategy underscores India’s broader effort to leverage multilateral forums to address its security concerns and to limit Pakistan’s access to international financial resources in the absence of demonstrable progress on curbing terror financing and ensuring transparent use of aid.

Agencies