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New Delhi: Keeping up its economic offensive, India plans to oppose the World Bank’s lending package to Pakistan, which is likely to be taken up by the multilateral agency next month, top government sources said.
New Delhi will also pitch for putting Islamabad back into the ‘grey list’ of the Financial Action Task Force (FATF), the global money laundering and terror financing watchdog, according to sources.
The World Bank is likely to discuss a $20 billion lending package for Pakistan in June. This proposed lending by the World Bank is part of the “Country Partnership Framework” for improving social indicators in neglected sectors and areas of Pakistan over the next 10 years.
A top government official, who did not want to be named, said India will oppose the World Bank’s lending proposal as there are possibilities that Pakistan would misuse the money to fund terror.
Earlier this month, India also opposed the International Monetary Fund’s $2.4 billion lending proposal to Pakistan. Despite India’s reservations, the IMF Board approved the proposal. However, the Washington-headquartered agency has imposed 11 new conditions on Pakistan for the release of the next tranche of funding.
“We are not against the IMF giving development assistance to a country,” said the source, adding India’s opposition to the IMF and the World Bank’s lending proposals to Pakistan is based on a proven record of misuse of the money.
“IMF’s own data shows that every time the IMF has given money to Pakistan, their spending on arms procurement goes up…those arms are used against India,” the official said.
Pakistan spends on average around 18% of its general budget on “defence affairs and services”, which is among the highest in the world. The country’s spending on arms imports increased by an average 20% annually between 1980 and 2023. During this period, it received a substantial amount of money from the IMF for development projects.
Another area where India would seek to corner Pakistan on the economic front is categorisation by the Paris-headquartered FATF, which categorises countries in four groups namely, ‘regular follow-up’, ‘enhanced follow-up’, ‘grey list’ and ‘black list’. India is ranked as ‘regular follow-up’, which is the best category.
In 2018, Pakistan was put under ‘grey list’ due to its weak framework related to money laundering and terrorism financing. In October 2022, Pakistan was removed from the grey list after it promised to enact laws to curb money laundering and terrorism financing.
FATF ranking is decided based on mutual evaluation. The next round of the FATF meeting is scheduled to be held in late June. India is preparing a dossier on how Pakistan has failed to keep up with its promise made in 2022 related to the fight against terrorism financing and money laundering, the source said.
Grey-listed countries are required to report to FATF once in every four months on its action plan. If it does not show progress, it can be pushed to the black list, which is subject to counter measures especially related to trade and investments.