India-Pakistan tensions: World Bank clarifies role in Indus Waters Treaty, says it's only a facilitator

Ajay Banga’s comments also addressed growing speculation about his recent visit to India.

Amid rising tensions between India and Pakistan, World Bank President Ajay Banga has clarified that the global financial institution has no role to play in resolving the dispute surrounding the Indus Waters Treaty (IWT), other than acting as a facilitator.

“There is a lot of speculation in the media about how the World Bank will step in and fix the problem… but it is all bunk. The World Bank’s role is merely as a facilitator,” Banga said, as quoted by the Indian government's official handle on X.

We have no role to play beyond a facilitator. Theres a lot of speculation in the media about how the World Bank will step in & fix the problem but its all bunk. The World Banks role is merely as a facilitator-World Bank President, Ajay Banga on #IndusWaterTreaty Suspension pic.twitter.com/6bbiZpKf0o

PIB India (@PIB_India) May 9, 2025

Speaking to CNBC-TV18’s Managing Editor Shereen Bhan, Banga said, “We have to pay the fees of those guys through a trust fund that was set up at the Bank at the time of creation of the treaty. That's our role. We have no role to play beyond that.”

The remarks come just days after India suspended the decades-old IWT in response to the April 22 Pahalgam terror attack, which killed 26 Indian civilians, most of them tourists. The treaty, signed in 1960 with the World Bank’s facilitation, governs the distribution of water from the Indus, Jhelum, and Chenab rivers between India and Pakistan.

India’s move to suspend the IWT was strongly criticised by Pakistan, which described it as “an act of war.” The treaty is vital to Pakistan, with the waters from the Indus system, particularly the western rivers Indus, Jhelum, and Chenab, providing nearly 80 percent of its irrigation for agriculture.

However, Indian officials have defended the decision. On Thursday, Foreign Secretary Vikram Misri underscored that the treaty was signed in a different era, defined by goodwill and trust, which he said no longer exists.

“If you see (closely), the preamble of the treaty itself states that the treaty was concluded in a spirit of goodwill and friendship. Mark those words… It is India's patience and tolerance that, despite 65 years of attacks and provocations, we have been adhering to the treaty,” Misri said.

“The fact is, there have been fundamental changes to the circumstances in which the treaty was concluded,” he added, calling for a reassessment of India's obligations under the agreement.

Ajay Banga’s comments also addressed the growing speculation about his recent visit to India. His meeting with Prime Minister Narendra Modi in Delhi took place a day after India launched Operation Sindoor, a tri-services military response that targeted nine terror camps in Pakistan. Amid these developments, there was a talk that India might urge the World Bank to exert financial pressure on Pakistan.

However, government sources later clarified that Banga’s visit was scheduled in advance and centred on investment opportunities, particularly in Uttar Pradesh. He is also expected to meet Chief Minister Yogi Adityanath during his trip.

The IWT, signed after nine years of negotiations brokered by the World Bank, has survived three wars and multiple military flare-ups between the two nations. India’s decision to suspend the treaty marks a significant departure from that long-standing position, reflecting the gravity of the current geopolitical crisis.