Reserve Bank of India (RBI) Governor Shaktikanta Das addresses G-20 Finance Track seminar on ‘Global Economy: Challenges, Opportunities and the Way Forward’, in Mumbai on August 11, 2023.
| Photo Credit: ANI
Reserve Bank Governor Shaktikanta Das on August 11 pitched for the “expeditious completion” of the sixteenth normal review of the quotas on the International Monetary Fund (IMF), declaring that the identical will help the multilateral lender help distressed international locations in a greater method.
Addressing a G20 seminar on the worldwide financial system, organised by the Finance Ministry and the Reserve Bank of India (RBI) right here, Das additionally stated the funding situations of the IMF are such that they make the nation that wants the cash urgently look elsewhere as a result of these situations include tons of riders and attendant stigmas.
“My point is that corrective measures, including financing, should be put in place in a timely, non-stigmatised and more open access basis. For this, a bigger and stronger IMF that is capable of managing the levels of country-risk assumes crucial importance.
“This is more so since the IMF’s support is linked to the quota size of the member-countries, the 16th general review of the quotas and its attendant requirements, including governance reforms, need to be completed expeditiously,” Mr. Das stated.
He additionally stated that current experiences recommend poor international locations going through monetary difficulties go to different our bodies past the IMF as a result of of the perceived stigma or lack of entry.
Therefore, “a bigger and stronger IMF that is capable of managing the levels of country risks assumes crucial importance,” he famous.
According to him, the essential position of the IMF and the World Bank in addressing international debt vulnerabilities can’t be overstated as they’re on the centre of worldwide financial and monetary system.
Hence it’s incumbent upon them to do extra for international locations in debt misery, the Governor stated.
Mentioning in regards to the inherent limitation of the IMF and World Bank’s methods of funding, Mr. Das stated the IMF’s precautionary programmes such because the precautionary lending line can be found for international locations with sound macro-fundamentals however there’s little cause for international locations with sturdy macro-fundamentals to hunt precautionary traces.
Further, the stand-by preparations are provided for international locations with a steadiness of funds disaster however such preparations include efficiency benchmarks, and the attendant stigma, he identified.
“This is an important issue, as the recent experience shows how the perceived stigma of and/or lack of access to the IMF programmes can cause countries to seek support from other lenders rather than the IMF, with debt sustainability consequences.
“It could also be useful if programmes might be designed with much less conditionalities for international locations with macro-fundamentals that aren’t sound however moderately resilient, if they don’t seem to be marred by steadiness of funds stress,” Mr. Das suggested.
He also went on to argue that such quota reforms besides enhancing the legitimacy of the IMF in its oversight of the international monetary and financial system will also increase traction for its policy advice.
“We should not enable the burden of debt to stifle the potential for international development,” Mr. Das stated.
