World Bank rules out intervention in IWT amid India-Pakistan tensions; chief Ajay Banga meets PM Modi

He acknowledged that uncertainty and volatility remain risks to the global economy, warning that if these conditions persist, a global slowdown is inevitable.

Days after India suspended the Indus Water Treaty (IWT) in a strong diplomatic action against Pakistan, the World Bank on Thursday said that it will not interfere in the issue.

In an interview to CNBC-TV18's Managing Editor Shereen Bhan, World Bank chief Ajay Banga said that the financial institution is merely a facilitator and has no role to play beyond that.

Banga, who is on a visit to New Delhi, also met Prime Minister Narendra Modi on May 8 amid escalating tensions between India and Pakistan.

The World Bank had facilitated the signing of the Indus Waters Treaty between India and Pakistan in 1960 to manage and share the waters of the Indus River system.

"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," he said.

Signalling that IWT is a bilateral issue, Banga said that it is a decision between India and Pakistan.

Banga added that IWT did not have any provision to allow for suspension the way it was drawn up.

"It either needs to be gone, or replaced by another one, and that requires the two countries to want to agree," he added.

In a swift diplomatic retaliation after the deadly Pahalgam attack, India said that it will hold the treaty in abeyance until Pakistan takes decisive action against terror groups.

New Delhi has also started regulating water flow to Pakistan, especially via the Chenab River.

Meanwhile, India has also started work to boost reservoir holding capacity at two hydroelectric projects in Jammu and Kashmir after suspending the treaty.

Notably, Indus Basin rivers support Pakistan’s 25% GDP and play an existential role in maintaining the country’s food security.