India is intensifying its diplomatic and economic campaign to isolate Pakistan internationally, particularly following the April 22 Pahalgam terror attack that killed 26 people. As part of these efforts, Finance Minister Nirmala Sitharaman urged Asian Development Bank (ADB) President Masato Kanda in Milan to suspend all funding to Pakistan, whose ADB portfolio currently includes 53 loans and three grants totaling \$9.13 billion. India also plans to raise objections during the International Monetary Fund (IMF) board meeting on May 9, where Pakistan’s bailout package is under review.
In a broader move to financially constrain Pakistan, India is reportedly preparing to request the Financial Action Task Force (FATF) to place Pakistan back on its grey list, which would restrict the country’s access to international financial assistance and development funds. Additionally, Sitharaman has called on the Italian government to halt all forms of financial support to Pakistan and is expected to coordinate similar actions with other European countries. India is working on a global outreach campaign to discourage further international funding to Islamabad.
Further compounding Pakistan’s economic difficulties, global credit rating agency Moody’s issued a report warning that ongoing tensions with India could impair Pakistan’s access to foreign funds and destabilize its foreign exchange reserves. The agency emphasized that any prolonged escalation would undermine Pakistan’s fiscal consolidation and macroeconomic recovery efforts. In contrast, Moody’s noted that India continues to demonstrate economic resilience with strong growth, robust public investment, and stable macroeconomic conditions. India has also suspended the Indus Waters Treaty and granted its military full autonomy to respond to Pakistan.