The economy of Pakistan will be impacted negatively after the decision by FATF to place the nation in ‘grey list’ because it failed to accomplish obligations to avoid terror financing.
The country is likely to undergo a risk demote by multiparty lenders like World Bank, IMF, ADB as well as a decrease in risk assessment by S&P Moody’s Investors Service and Fitch, as expressed by an economics expert. Consequently, the stock market of Pakistan is projected to fall considerably and China is expected to gain from the economic scenario by increasing its investment marks.
Now, it will be harder for Islamabad to access funds from the global markets after coming under the ‘grey list’, a government insider said who asked his identity to be kept hidden. However, Pakistani PM’s financial adviser, Miftah Ismail claimed that Pakistan’s economy will not experience any notable effect.
The decision by FATF will be a noteworthy hindrance for Islamabad in its effort to perk up its image.
Financial Action Task Force, which maintains black and grey lists for classifying countries that works weakly to defy and fight terror financing and money laundering, is not given the authority to inflict sanctions on the nation, which has been found uncooperative with the mandatory standards.
In the year 2015, Pakistan was excluded from FATF; but its inactivity placed it back in the grey list and there are fears that it will be put in black list by the end of June.
The financial industry may get a blow as the biggest international bank—Standard Chartered with more than 100 branches across Pakistan, along with Deutsche Bank and Citibank that work with corporate clients and business might take a decision to withdraw.
In the middle of extreme pressure from international regulators to safeguard against terrorist financing and money laundering, banks and financial institutions have been moving back from high-risk nations in current years.