How the Grey Listing would impact Pakistan?
Greylist will endanger Pakistan’s handful of remaining banking links to the outside world. This would cause real financial pain to the fragile economy of Pakistan.
It will squeeze Pakistan’s economy and make it harder to meet its mounting foreign financing needs, including potential future borrowings from the International Monetary Fund (IMF)
It would also lead to the downgrading of Pakistan’s debt ratings by international banking and credit rating agencies, making it more difficult to tap funds from international bond markets.
It will also suspend international funds and aid to Pakistan such as Coalition Support Funds money which the US owes to Pakistan for military operatations.
It will also lessen investors confidence in Pakistan and impacts its imports and exports widening its existing huge current account deficit (CAD)
Why FATF has decided to continue Pakistan in Grey List?
The statement issued by FATF states that Pakistan should continue to work on implementing its action plan to address its strategic deficiencies, including by adequately demonstrating its proper understanding of the terror financing risks posed by the terrorist groups and conducting supervision on a risk-sensitive basis.FATF notes that even though Pakistan has revised its terror financing risk assessment, it does not reflect proper understanding of the TF risks posed by Da’esh (ISIS), AL-Qaida, JuD (Jamat-ud- Dawa), FIF (Falah-e-Insaniat Foundation), LeT (Lashkar-e-Taiba), JeM (Jaish-e-Mohammad), HQN (Haqqani Network) and persons affiliated with the Taliban.
Noting the limited progress on action plan items due in January 2019, FATF urged Pakistan to swiftly complete its action plan, particularly those with timelines of May 2019