India to push for international financial measures against Pakistan: Source

India will push the Financial Action Task Force (FATF), the global financial crime watchdog, to place Pakistan back on its “grey list” and will oppose upcoming World Bank funding to Islamabad, a top Indian government source said on Friday.

India announced a series of retaliatory measures following what it says are Pakistan-backed militant attacks, including one last month that killed 26 Hindu tourists in Kashmir. Among the steps is a decision to keep the critical Indus Waters Treaty in abeyance.

The government source said India would “not miss any opportunity in opposing Pakistan, and the next one is funding by World Bank, and we will raise our protest there too.”

Pakistan’s finance ministry did not immediately respond to a request for comment. Pakistan has denied involvement in the Kashmir attack and called India’s move on the water treaty an “act of war.”

The nuclear-armed neighbours engaged in their worst military hostilities in nearly three decades before agreeing to a ceasefire on May 10.

Pakistan was removed from the FATF grey list in 2022, a move that improved its standing with global lenders and provided relief to its crisis-hit economy. The grey list subjects countries to increased monitoring until they address identified flaws in their financial systems.

The Indian government source claimed Pakistan had not fulfilled the conditions for being taken off the grey list and should be returned to it. The source also alleged that Pakistan’s arms purchases tend to spike following International Monetary Fund (IMF) loans.

Reuters could not independently verify these claims. The FATF, World Bank and IMF did not immediately respond to requests for comment.

Pakistan secured a $7 billion IMF bailout last year, and a further $1.4 billion arrangement this month under a climate resilience fund.

At a press conference in Washington on Thursday, IMF director Julie Kozack said Pakistan had met all its targets and made progress on reforms, which led the board to approve last year’s programme.

Indian Prime Minister Narendra Modi said on Thursday that Pakistan — its army and its economy — would “have to pay a heavy price for every terrorist attack.”