India to take up Pakistan funding with World Bank, may rake up FATF grey list issue: Sources

The government will reportedly take up the issue of funding to Pakistan with the World Bank to Pakistan in June 2025, government sources told Business Today TV. The World Bank is expected to approve a $20 billion lending package to Pakistan in June this year. 

The $20 billion lending package for Pakistan is a part of a larger 10-year program called the "Pakistan Country Partnership Framework 2025-35". It is aimed at improving social indicators, focusing on areas such as child stunting, learning poverty, and climate resilience and boosting private investment and expanding fiscal space. 

Moreover, the government will also rake up the issue of putting Pakistan in the grey list of the Financial Action Task Force (FATF). 

The Modi government is reportedly disappointed with the $2.4 billion bailout package given by the International Monetary Fund (IMF) to Pakistan on May 9. The government, however, is thankful to the global body for imposing 11 new conditions for the release of the next tranche of its bailout package.

The new conditions include parliamentary approval for a Rs 17.6 trillion federal budget, a higher debt servicing surcharge on electricity bills, and removal of restrictions on older used cars.

The IMF’s staff-level report warned: "Rising tensions between India and Pakistan, if sustained or deteriorate further, could heighten risks to the fiscal, external and reform goals of the programme."

As per sources, the government reached out to the IMF's Managing Director Kristalina Georgieva on the bailout package to Pakistan. 

The government sources have told Georgieva that the government is "not against giving money to any country, but data suggests that a bailout has come during a war-like situation".

Out of 28 times the IMF has supported Pakistan, the money has been utilised for boosting the country's military arsenal instead of enhancing its fiscal health. Moreover, the government has raised the issue of IMF's funding to Pakistan with the Foreign Ministers of Germany, Italy, and France. 

“India is left to defend itself, despite an outrageous violation of our citizens on our soil," India reportedly told the foreign ministers of Germany, Italy, and France. Indian embassies were pursuing all the counterparts of the IMF to help New Delhi. 

Meanwhile, the IMD has defended its bailout package to Pakistan saying its board was satisfied that the country indeed met all the targets as laid down by the global body to meet the funding criteria. 

Speaking to BT TV, Julie Kozack, Director, IMF Communications Department, said, “I want to make three important points to help you understand this. IMF financing is meant to resolve balance of payments issues only. All EFF disbursements to Pakistan go directly to the central bank’s reserves. These funds are not used for government budget financing. There is a zero limit on lending from the central bank to the government. The programme includes structural reforms to improve fiscal management.”