India to Push Global Funding Freeze on Pakistan Over Pahalgam Terror Attack

In the wake of the deadly Pahalgam terror attack, India is preparing a diplomatic campaign to block international financial assistance to Pakistan, accusing Islamabad of harboring and supporting terrorist networks. The strategic move aims to pressure global institutions, including the International Monetary Fund (IMF), World Bank, and Asian Development Bank, to re-evaluate ongoing and future financial aid to Pakistan.

Sources in New Delhi indicate that India will formally request the IMF to reconsider its recent and upcoming disbursements to Pakistan, including a $7 billion bailout granted last year and a $1.3 billion climate resilience loan issued in March 2025. The IMF’s executive board is expected to meet Pakistani officials on May 9 for a key review of these arrangements. India is likely to raise strong objections during these discussions, citing the April 22 terror attack in Jammu and Kashmir’s Pahalgam as justification for withholding further support.

India is also expected to urge the Financial Action Task Force (FATF), the global watchdog on terror financing and money laundering, to place Pakistan back on its grey list, which would restrict access to international financial markets and increase scrutiny on its monetary flows. According to Indian officials, such steps are necessary to ensure that international funds do not indirectly support terrorism or destabilize regional peace.

Analysts say choking Pakistan’s access to external financing could inflict serious harm on its already fragile economy, which remains dependent on multilateral loans for stability. A policy paper by Soumya Bhowmick of the Observer Research Foundation (ORF) emphasized the importance of embedding counter-terrorism safeguards into all economic assistance packages. “Continued financial aid without strict accountability risks undermining efforts to stabilize Pakistan and inadvertently financing activities that threaten global security,” the report stated.

In January 2025, the World Bank had greenlit a $20 billion package for Pakistan to support various development and recovery projects. That funding, too, may now come under scrutiny if India’s campaign gains traction among key global stakeholders.

New Delhi’s strategy marks a sharp escalation in its diplomatic offensive against Pakistan, aligning economic pressure with security concerns in the aftermath of one of the deadliest attacks on Indian civilians since the 2008 Mumbai tragedy.