India is expected to use this platform to express concerns
over Pakistan’s rising defence budget and its alleged failure to deliver on FATF commitments. According to a Moneycontrol report on May 23, the Indian government is preparing a detailed dossier to highlight Pakistan’s delays in passing anti-terror laws, continued sheltering of designated terrorists, and potential diversion of multilateral development aid for military use.
During his recent visit to Washington, Foreign Secretary Vikram Misri discussed the FATF process with US Deputy Secretary of the Treasury Michael Faulkender. The talks focused on enhancing collaboration within international financial institutions, and India’s push to re-list Pakistan on FATF’s grey list due to its alleged role in cross-border terror financing.On June 10, P
akistan unveiled its FY26 budget, raising defence expenditure by 20% to $9 billion, while cutting overall federal spending by 7%. The move has drawn some criticism, particularly in the context of continued international support for Pakistan.
Earlier this month, the Asian Development Bank (ADB) also approved an $800 million financing package for Pakistan. India has strongly opposed both, citing concerns over weak reforms, declining tax-to-GDP ratios and the risk of financial aid fuelling militarisation.
In May, the International Monetary Fund (IMF) approved a $1 billion loan and is evaluating another $1.3 billion under its Resilience and Sustainability Facility (RSF).
Indian officials argue that continued bailouts without accountability risk enabling state-sponsored terrorism and destabilising global financial integrity.
Pakistan has previously been placed on FATF’s grey list three times: from 2008–2010, 2012–2015, and most recently from 2018 to 2022. The latest listing was initiated by the United States and supported by the UK, France, and Germany over significant lapses in counter-terrorist financing measures.
Re-listing can restrict foreign investment, increase borrowing costs, and lead to closer scrutiny by global lenders. Following the two-day plenary, FATF-style regional bodies will convene on June 14 for a high-level dialogue to strengthen global cooperation and oversight mechanisms.
