India has asked the International Monetary Fund to review loans disbursed to Pakistan, an Indian government source told Reuters on Friday, as tensions between the South Asian neighbours escalated following a deadly attack in Kashmir.

India and Pakistan have announced a raft of measures after an attack on Hindu tourists in Indian Kashmir last week killed 26 men and there is a fear that the latest crisis between the nuclear-armed rivals could spiral into a military conflict.

New Delhi has identified the three attackers, including two it says are Pakistani nationals, as “terrorists”. Islamabad has denied any role and called for a neutral investigation.

India suspended a critical river water sharing treaty and the two countries have closed their airspace to each other’s airlines.

Pakistan secured a $7 billion bailout programme from the IMF last year and was granted a new $1.3 billion climate resilience loan in March.

The programme is critical to the $350 billion economy and Pakistan said it has stabilized under the bailout that helped it stave off a default threat.

India raised concerns with the IMF on its loans to Pakistan, asking for a review, a government source told Reuters without elaborating.

The IMF and India’s finance ministry did not immediately respond to a request for comment.

The advisor to Pakistan’s finance minister said the IMF programme is “well on track”.

“The latest review has been done well and we are completely on track,” advisor Khurram Schehzad, told Reuters, adding that Pakistan had very productive spring meetings with financial institutions in Washington.

“We did about 70 meetings ... interest has been very high for investing and supporting Pakistan as the economy turns around,” Schehzad said.

The soaring tensions between the two countries has drawn global attention and calls for cooling tempers.

US Vice President JD Vance said on Thursday that Washington hoped Pakistan would cooperate with India to hunt down Pakistan-based assailants.

Muslim-majority Kashmir is claimed in full by both Hindu-majority India and Islamic Pakistan, but each rules it in parts.

While New Delhi accuses Pakistan of backing an uprising in Indian Kashmir since 1989, Pakistan says it only offers diplomatic and moral support to a Kashmiri demand for self-determination.