India fires ‘financial missile’ at Pakistan, asks ADB to stop funding, bailout packages, Nirmala Sitharaman meets…

Nirmala Sitharaman with Masato Kanda of ADB in Milan

In what may be called hitting Pakistan where it may hurt it most, India is trying to isolate the rogue state economically and financially. New Delhi has fired its latest salvo at Pakistan by making all-out efforts to isolate it on the international stage. It will also ensure the drying up of development-related funding and bailout packages by multilateral agencies and nations. According to news agency ANI, Finance Minister Nirmala Sitharaman met Asian Development Bank (ADB) President Masato Kanda in the Italian city of Milan on Monday and asked him to suspend all kinds of funds to Pakistan. 

Will FATF tighten Pakistan?

The Asian Development Bank’s sovereign portfolio in Pakistan at present comprises 53 loans and 3 grants totaling $9.13 billion. India is also reportedly expected to raise concerns at the International Monetary Fund (IMF) about Pakistan’s bailout package. The IMF board is scheduled to review the arrangement in its meeting on May 9, its website showed. 

Earlier, India downgraded diplomatic ties with Pakistan after the April 22 terrorist attack on tourists in Jammu and Kashmir’s Pahalgam, leading to the death of 26 individuals and several others injured, mostly tourists. Media reports also suggest that in another effort to economically deprive and weaken Pakistan from sources of funding, India will approach the global money laundering and terrorist financing watchdog FATF (Financial Action Task Force) to include Pakistan in the grey list. 

Nirmala Sitharaman meets Italy’s FinMin

Adding Pakistan to the FATF grey list would make it difficult to attract bailout funding and for their developmental projects.  Separately, at a meeting with Italian Finance Minister Giancarlo Giorgetti on Monday, India’s Finance Minister Nirmala Sitharaman demanded that the Italian government cut all kinds of financing to Pakistan, as New Delhi continues to extend its punitive moves against Islamabad. Reportedly, India is also working with European nations to ensure stricter oversight of international funding to Pakistan.

Moody’s Warns Pakistan

Going ahead, India will most likely reach out to other nations, formally demanding the cutting of financing to Pakistan. On Monday, Moody’s in a report, cautioned that a persistent increase in tensions between India and Pakistan is expected to impair Pakistan’s access to external financing and pressure its foreign-exchange reserves. Pakistan’s foreign exchange reserves remain well below what is required to meet its external debt payment needs for the next few years, the global rating agency noted in the report.

Moody’s Finds India stable

In the same report, Moody’s has painted a positive picture for India. The report said in India, the macroeconomic conditions are stable, bolstered by moderating but still high levels of growth and strong public investment and healthy private consumption. Sustained escalation in tensions with India would likely weigh on Pakistan’s growth and hamper the government’s ongoing fiscal consolidation, setting back Pakistan’s progress in achieving macroeconomic stability, Moody’s added.

Post the Pahalgam terror attack, India has suspended the Indus Waters Treaty of 1960, and Prime Minister Narendra Modi has given full autonomy to the Indian armed forces to decide the nature, timing, and targets of India’s response against the terror- harbouring nation. 

(With inputs from ANI)