India Eyes FATF Grey List and IMF Pressure to Isolate Pakistan Post Pahalgam Terror Attack:

Suspense crime, Digital Desk : Following the terrorist attack in Pahalgam, Jammu and Kashmir, India is now more focused on trying to financially suffocate Pakistan by cutting off its international financial access. As cited by The Indian Express, India is implementing a two-fold approach: educating the global community on Pakistan’s imminent danger which may lead to re-inclusion in FATF grey-list, while simultaneously obstructing IMF financial aid.

FATF Grey Listing: Renewed Push After 2022 Exit

Pakistan was put on the FATF grey list in 2018 and removed in October 2022. India on the other hand had consistently maintained that terror supporting countries inet ie Pakistan are nurturing and providing aid to terror supporting proxies like Lashkar-e-Taiba, Jaish-e-Mohammed and Hizbul Mujahideen.

India’s submission to FATF is expected to highlight:

The TRF and other terrorist groups masquerading as controlled fronts.

Terrorism funding through NGO's and religious charity organizations.

Lack of prosecution of UN terrorist list identifiers like Hafiz Saeed and Masood Azhar.

Non enforcement of vital asset freeze and financial blockade on terrorism.

FATF member nations need support of India during the plenary for any hope of receiving pending proposals and assigning additional members: They have so far struck gold in garnering attention, sitting on a promising proposal from 23 active FATF members led by the US,UK, France, Germany, Australia and the EU along with Saudi Arabia and the UAE who voiced support towards these nations post the April 22 attack.

India’s Dominance Within FATF

Pakistan is a subordinate member of the Asia Pacific Group, an offshoot of the FATF regional body, while India is a full member of both FATF and the APG, giving it greater diplomatic reach. India is likely to take advantage of this position by seeking formal discussion during the next FATF plenary.

IMF Bailout in the Barrel

India is also gearing up to take concerns with Pakistan’s ongoing $7 billion bailout under the Extended Fund Facility (EFF) which was approved in July 2024 while the International Monetary Fund also tries to inject further discipline. India has asserted Islamabad is misusing the funding for direct or indirect subsidization of terror supports.

The IMF program has a duration of 37 months and is arranged with six performance benchmarks. The next $1 billion installment hinges on Pakistan adhering to strict economic benchmarks. India’s objections are aimed at enhanced oversight, greater prerequisites founded on counter-terrorism, and deeming Pakistan compliant.

Pakistan’s fragile economy at stake

Inflation surpassing thirty percent—blistering orthodoxy. Pakistan’s economy, alongside dwindling forex reserves and enduring supine debt levels is at dire straits. Restructuring shifts Pakistan back in the FATF grey list and interrupting IMF support would essentially obliterate foreign investment and bolster Pakistan’s financial fragility.