International Monetary Fund(IMF)

15-Oct-2022: Union Finance Minister participates in Development Committee (DC) meeting in Washington DC

Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman participated in joint World Bank-International Monetary Fund (WB-IMF) Development Committee (DC) meeting during the Annual Meetings 2022 in Washington DC, today.

The Development Committee had specifically met to discuss two critical aspects that the world is facing:

The food and energy crisis: Weathering the storm
Achieving Climate and Development goals: The Financing Question

In her opening remarks, the Finance Minister stated that this is an excellent opportunity to put our heads together and think about how best we can negotiate the multiple challenges and bring back long-term growth. Despite this year's projected growth rate of 7 percent for the Indian economy, we remain concerned about the global economic outlook and geopolitical environment, She added.

Smt. Sitharaman stated that the Food and Energy Crisis paper rightly identifies energy efficiency as the "first fuel of choice". Similarly, reducing crop loss and food waste should also be the "first intervention of choice" to ensure food security.

The Finance Minister urged the World Bank to avoid a unidimensional view of subsidies and to differentiate between distortive subsidies and targeted support to the vulnerable households.

Giving India's example as an illustration, Smt. Sitharaman said that by providing free LPG connections under the Pradhan Mantri Ujjwala Yojna over the last six years. India has ensured that access to Clean cooking methods has achieved near saturation for women in India. This has made a definitive contribution in improving India's performance on SDGS 3, 5 and 7.

While the quest for energy and food security necessitates non exclusion of fossil fuels from our energy mix, the Finance Minister noted that India has set up its first pure hydrogen producing plant as well as its first 2G bioethanol refinery this year.

Going forward, Smt. Sitharaman said that there are 3 clear opportunities for the World Bank Group:

Promoting behaviour change to increase energy efficiency and to reduce food losses. Programmes like the Lifestyle for the Environment (LiFE) launched by the Prime Minister of India on the World Environment Day in June 2022, in which Mr. David Malpass, president, World Bank Group, delivered a wonderful keynote address, can mainstream responsible consumption behaviour.
Helping all client countries in arranging concessional financing and technology transfer in areas like renewable and green energy.
Supporting regional integration not only through International Development Association (IDA) but also through International Bank for Reconstruction and Development (IBRD).

On financing climate and development goals, the Finance Minister said that the WBG is uniquely placed to bring together all stakeholders for developing an investment strategy for climate and development finance. Yet, thw world must never lose focus on the internationally agreed basic principle of common but differentiated responsibilities. This necessitates avoidance of a one-size fit-all approach.

Smt. Sitharaman stated that mitigation of risks is essential for crowding in private capital. While welcoming the launching of SCALE, the Finance Minister encouraged the World Bank to increase the share of grants from the current 5 % level and to work below the country level to support projects with huge climate impact beyond the national borders.

Smt. Sitharaman exhorted for prioritising consultations with key stakeholders throughout the formulation of CCDRS and following the "One Bank" approach are critical to their success.

While urging the World Bank to take the lead and also help build consensus across MDBS, the Finance Minister pushed for the recommendations of the Independent Review of the MDB Capital Adequacy Frameworks commissioned by the G20 hold the key for sustained financing.

About the WB-IMF Annual Meetings: The joint WB-IMF Development Committee meets every fall at the time of the Annual Meetings of the Boards of the Governors of the World Bank and the IMF, and every spring at the Spring Meetings, to discuss the progress of the work of the Bank and the Fund. Following the Annual Meetings tradition, the Development Committee meets in Washington two years out of three and, in order to reflect the international character of the two institutions, every third year in a different member country.

19-Apr-2022: Finance Minister Smt. Nirmala Sitharaman meets IMF Managing Director Ms. Kristalina Georgieva in Washington D.C.

Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman had a bilateral meeting with Ms. Kristalina Georgieva, Managing Director, International Monetary Fund (IMF), on the sidelines of the International Monetary Fund-World Bank (IMF-WB) Spring Meetings in Washington D.C. today.

Both, the Finance Minister and the Managing Director, were accompanied by senior officials like Shri Anantha V. Nageswaran, Chief Economic Advisor, Ministry of Finance, Government of India, and Ms. Gita Gopinath, FDMD of IMF.

During the meeting, they discussed issues of importance for India besides several issues currently being faced by the global and the regional economies.

Ms. Georgieva highlighted the resilience of India which remains the fastest-growing country across the globe despite challenges posed by the COVID-19 pandemic. Ms. Georgieva also referred to an effective policy mix followed by India that was well targeted. She lauded India for its contribution to the capacity development activities of the IMF.

Ms. Georgieva praised India’s vaccination programme and the help extended to its neighbour and other vulnerable economies. The IMF MD particularly brought reference to the help India is providing to Sri Lanka during their difficult economic crisis. Smt. Sitharaman indicated that IMF should support and urgently provide financial assistance to Sri Lanka. The Managing Director assured the Finance Minister that the IMF would continue to actively engage with Sri Lanka.

Discussing the recent geopolitical developments, Smt. Sitharaman and Ms. Georgieva raised concerns about its impact on global economy and the challenges linked to the rising energy prices due to it.

Explaining India’s policy approach, Smt. Sitharaman mentioned that an accommodative fiscal stance was also accompanied by major structural reforms, including the bankruptcy code and targeted help to MSME and other vulnerable sections.

Smt. Sitharaman said that Monetary Authority fully supported and complemented these efforts with an accommodative stance.

The Finance Minister further stated that India has been helped by good agricultural output, supported by a good monsoon during the COVID pandemic period. Agricultural exports, along with other exports, have also sharply increased. India is entering into new economic activities which will help resolve some of the global supply chain issues, She concluded.

15-Oct-2021: Finance Minister Smt. Nirmala Sitharaman attends Plenary Meeting of the International Monetary and Financial Committee (IMFC) of the IMF in Washington D.C.

Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman attended the Plenary Meeting of the International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund (IMF) at the Annual Meetings 2021 held in Washington D.C. on 14th October 2021. The meeting was attended by Governors/Alternate Governors representing 190-member countries of the IMF.

The discussions at the meeting centered on “vaccinate, calibrate and accelerate” which is the theme of the Managing Director's Global Policy Agenda. The members of the IMFC elaborated the actions and measures taken by member countries to combat COVID-19 and facilitate economic recovery.

Finance Minister Smt. Sitharaman conveyed that India recognises that universal vaccination is the key to stemming the spread of the virus. She asserted that the stark differences in vaccination coverage of low-income countries and advanced countries is of concern and it is critical that we need to address vaccine inequity.

The Finance Minister emphasized importance of the multilateral approach with the principles of equity and common, but differentiated, responsibilities and capabilities to combat climate change. Smt. Sitharaman stressed that it is important to recognize the formidable challenges faced by developing countries in getting access to affordable financing and technology.

Before attending the IMFC Plenary meeting, Smt. Sitharaman had also participated in Restricted Breakfast Meeting of the International Monetary Fund.

Speaking on the issue of COVID-19 pandemic and the response of health care systems, the Finance Minister said that to win the war against COVID-19, it is imperative that we freely share medical research and develop adaptive, responsive, affordable, and accessible health care systems.

On the issue of COVID-19 vaccine availability and economic recovery, Smt. Sitharaman urged for greater equity in vaccine access and affordability as the world looked for a faster exit towards recovery and growth.

The Finance Minister also highlighted to all the participants that despite the pandemic crisis, India continued its agenda of structural reforms. Wide-ranging reforms, including in agriculture, labour and financial sector are expected to contribute towards acceleration of the economy.

About IMFC Meetings: The IMFC meets twice a year, once during the Fund-Bank Spring Meetings in April, and again during the Annual Meetings in October. The Committee discusses matters of common concern affecting the global economy and advises the IMF on the direction of its work.

8-Apr-2021: Finance Minister Smt. Nirmala Sitharaman attends Plenary Meeting of International Monetary and Financial Committee (IMFC) of IMF through video-conference

Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman here today attended the Plenary Meeting of the International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund (IMF) at the virtual Spring Meetings 2021. The meeting was attended by Governors/Alternate Governors representing 190 member countries of the IMF.

The discussions at the meeting were based on IMF Managing Director’s Global Policy Agenda (GPA) titled, “Bolstering the Recovery, Countering Divergence”. The members of the IMFC updated the committee on the actions and measures taken by member countries to combat COVID-19 pandemic and facilitate economic recovery.

Finance Minister Smt. Sitharaman emphasised that the GPA’s suggestion to hasten the transition to a low-carbon economy for promoting growth that benefits all needs to be viewed in the context of its implications for the Emerging Market and Developing Economies and low-income economies. The burden of economic transformation to a low carbon economy would disproportionately be higher for these countries, and positive benefits may not accrue in the short run. The focus needs to remain on the agreed principles of equity and differentiated responsibility of climate action.

The Finance Minister endorsed the view of the IMF that the key priority remains to end the pandemic and the universal availability of vaccines and medical solutions need to be ensured. Smt. Sitharaman informed the Committee that the world’s largest vaccination drive is under way in India with 83.1 million doses administered as on 6th April, 2021 and that India has supplied 65 million made-in-India COVID-19 vaccine doses to 80 countries, including 10 million vaccine doses as grant.

The IMFC meets twice a year, once during the Fund-Bank Spring Meetings in April, and again during the Annual Meetings in October. The Committee discusses matters of common concern affecting the global economy and advises the IMF on the direction of its work. This year, due to ongoing COVID-19 pandemic, the Spring Meetings took place through video-conference.

16-Apr-2020: Smt. Nirmala Sitharaman attends the Plenary Meeting of the International Monetary and Financial Committee (IMFC) of the IMF through video-conference

Union Minister of Finance & Corporate Affairs Smt. Nirmala Sitharaman attended through video-conference the Plenary Meeting of the International Monetary and Financial Committee, the Ministerial-level committee of the International Monetary Fund (IMF).

The discussions at the meeting were based on IMF Managing Director’s Global Policy Agenda titled, “Exceptional Times – Exceptional Action”. The members of the IMFC updated the committee on the actions and measures taken by member countries to combat COVID-19, and also remarked on IMF’s crisis-response package to address global liquidity and members’ financing needs.

Smt. Sitharaman, in her intervention at the meeting, outlined various measures taken in India to respond to the health crisis as well as to mitigate its impact. In this regard, she mentioned about allocation of $2 Billion (Rs 15,000 crore) by the Government of India for strengthening the healthcare system; announcement of a scheme of social support measures amounting to $23 Billion (Rs 1.70 lakh crore) to alleviate the hardship of the poor and the vulnerable; provision of relief to firms in statutory and regulatory compliance matters; easing of monetary policy by the RBI; and three-month moratorium on loan instalments. The Finance Minister also informed the IMFC about India’s role as a responsible member of the global community by providing critical medicines to other nations. She also mentioned about Prime Minister Shri Narendra Modi’s initiative of creating a COVID-19 Emergency Fund for the SAARC region at the SAARC Leaders’ video-meeting.

While responding to the IMF’s channel of support to member countries in times of the COVID-19 crisis, Smt. Sitharaman mentioned that the IMF has always played a pivotal role in maintaining stability of the international monetary and financial system and that it should continue rendering this critical role to the global financial architecture.

The IMFC meets twice a year, once during the Fund-Bank Annual Meetings in October, and again during the Spring Meetings in April. The Committee discusses matters of common concern affecting the global economy and advises the IMF on the direction of its work. This year, due to the COVID-19 Outbreak, the meeting took place through video-conference.

28-Mar-2020: The Great Lockdown: Worst Economic Downturn Since the Great Depression

International Monetary Fund Managing Director Kristalina Georgieva made the following statement following a conference call of G20 Finance Ministers and Central Bank Governors:

“The human costs of the Coronavirus pandemic are already immeasurable and all countries need to work together to protect people and limit the economic damage. This is a moment for solidarity—which was a major theme of the meeting today of the G20 Finance Ministers and Central Bank Governors.

“I emphasized three points in particular:

“First, the outlook for global growth: for 2020 it is negative—a recession at least as bad as during the global financial crisis or worse. But we expect recovery in 2021. To get there, it is paramount to prioritize containment and strengthen health systems—everywhere. The economic impact is and will be severe, but the faster the virus stops, the quicker and stronger the recovery will be.

“We strongly support the extraordinary fiscal actions many countries have already taken to boost health systems and protect affected workers and firms. We welcome the moves of major central banks to ease monetary policy. These bold efforts are not only in the interest of each country, but of the global economy as a whole. Even more will be needed, especially on the fiscal front.

“Second, advanced economies are generally in a better position to respond to the crisis, but many emerging markets and low-income countries face significant challenges. They are badly affected by outward capital flows, and domestic activity will be severely impacted as countries respond to the epidemic. Investors have already removed US$83 billion from emerging markets since the beginning of the crisis, the largest capital outflow ever recorded. We are particularly concerned about low-income countries in debt distress—an issue on which we are working closely with the World Bank.

“Third, what can we, the IMF, do to support our members?

We are concentrating bilateral and multilateral surveillance on this crisis and policy actions to temper its impact.
We will massively step up emergency finance—nearly 80 countries are requesting our help—and we are working closely with the other international financial institutions to provide a strong coordinated response.
We are replenishing the Catastrophe Containment and Relief Trust to help the poorest countries. We welcome the pledges already made and call on others to join.
We stand ready to deploy all our US$1 trillion lending capacity.
And we are looking at other available options. Several low- and middle-income countries have asked the IMF to make an SDR allocation, as we did during the Global Financial Crisis, and we are exploring this option with our membership.
Major central banks have initiated bilateral swap lines with emerging market countries. As a global liquidity crunch takes hold, we need members to provide additional swap lines. Again, we will be exploring with our Executive Board and membership a possible proposal that would help facilitate a broader network of swap lines, including through an IMF-swap type facility.

“These are extraordinary circumstances. Many countries are already taking unprecedented measures. We at the IMF, working with all our member countries, will do the same. Let us stand together through this emergency to support all people across the world.”

20-Oct-2019: IMF members delay quota changes, agree to maintain funding

Members of the International Monetary Fund (IMF) agreed to maintain its funding at $ 1 trillion but postponed changes to its voting structure. The deal is a compromise with the U.S., the Fund’s largest shareholder, which has resisted changes to the organisation’s voting structure as well as increases in its permanent resource base.

The deal will allow an extension of non-permanent, supplementary sources of funds – such as the New Arrangement to Borrow (NAB), a renewable funding mechanism that has existed since 1998, and bilateral borrowings from countries - the IMF had entered into these after the 2008 financial crisis to increase its lending ability.

The agreement extended the bilateral borrowing facility by a year - to the end of 2020 and a potential doubling of the NAB.

Specifically, the agreed package will leave IMF quotas (the primary source of IMF funds), which determine voting shares, unchanged. Instead, these will be reviewed before the end of 2023.

IMF quotas are distributed according to a four pronged formula that considers a member country’s GDP, its economic openness, its “economic variability” and international reserves.

Some IMF members have become frustrated with the pace of governance reforms, as the balance of economic and geopolitical power has shifted, becoming more dispersed across the world, particularly with the emergence of China and India - among the world’s largest and fastest growing economies.

India’s quota is 2.76% and China’s is 6.41%, while the U.S.’s quota is 17.46 % (translates to a vote share of 16.52%) giving it a unique veto power over crucial decisions at the IMF, many of which require a supermajority of 85%. The U.S. has resisted diluting its share, wary that it will benefit countries such as China.

Quotas are supposed to be reviewed every five years although these reviews can be delayed – as was the case with the 14th review. That process, completed in 2010, needed approval of the U.S. Congress, and it was not closed out till early 2016. The review’s outcomes included a doubling of the quota total and a shift in some voting rights to underrepresented and emerging market countries. India’s vote share increased marginally.

The 15th quota review is currently underway. Beyond the 15th Review, the IMFC is committed to revisiting the adequacy of quotas and continuing the process of IMF governance reform under the 16th General Review of Quotas, including a new quota formula as a guide, with the Review to be extended from 2020 to no later than December 15, 2023.

26-Aug-2019: IMF raises concern over India not following data norms

The International Monetary Fund (IMF) has raised concerns about delays in the release of economic and financial data by the Indian government. As per the IMF's "Annual Observance Report of the Special Data Dissemination Standard for 2018", India failed to comply with prescribed Special Data Dissemination Standard (SDDS) - a practice mandatory for all IMF members to guide them in providing their economic and financial data to the public.

India subscribed to the SDDS on December 27, 1996 and met all SDDS requirements on December 14, 2001. In 2018, India deviated from requirements prescribed in the SDDS in at least one instance in all the data categories. India's deviations from the SDDS is a concern as other BRICS nations such as Brazil, China, South Africa, and Russia have maintained a consistent record in the same period.

The Special Data Dissemination Standard (SDDS) is a global benchmark for disseminating macroeconomic statistics to the public. Data dissemination standards enhance the availability of timely and comprehensive statistics, which contributes to sound macroeconomic policies and the efficient functioning of financial markets.

SDDS subscription indicates that a country meets the test of "good statistical citizenship". Countries that subscribe to the SDDS agree to follow good practices in four areas: the coverage, periodicity, and timeliness of data; public access to those data; data integrity; and data quality.

The IMF has taken steps to enhance member country transparency and openness, including setting voluntary standards for dissemination of economic and financial data. The purpose of the SDDS is to guide member countries in the dissemination of comprehensive, timely, accessible, and reliable economic and financial statistical data in the context of increasing economic and financial integration. The IMF has established the SDDS as an initiative that serves the Fund's members who decide to voluntarily subscribe to the SDDS.

14-Oct-2018: India urges IMF to implement quota reforms

Stressing on the need to strengthen institutions like IMF to tackle financial crisis, Economic Affairs Secretary SC Garg called for quota reforms so that share of emerging nations increases in line with their growing economic position. Garg also pointed out that protectionism, trade tensions and tightening of financial conditions are challenges for the world.

Reforming IMF: In the context of these challenges, he said the time for building buffer and policy action by the emerging market economies is not there. “A suitable approach could be the association of the IMF (International Monetary Fund), being at the centre of the GFSN (global financial safety net), at an earlier stage rather than when crisis has already occurred. Hence, the strengthening of this Multilateral Institution is crucial.

Speaking at 15th General Review of Quotas in Bali, Indonesia, Garg said this agenda of IMF is urgent as there is a deadline fixed for its conclusion next year. Both, enhancement in the Quantum of Quota Resources and Realignment of Voting Shares should take place so that Quota Shares of EMDCs (Emerging Market and Developing Countries) increase in line with its growing relative economic position in the world.

Garg also participated in the 98th meeting of the Development Committee Plenary. He mentioned that India had supported the capital increase of the World Bank Group with the expectation that it will deliver on its core development responsibilities articulated in the Forward Look.

The additional capital would be put to work expeditiously and leveraged to enhance International Bank for Reconstruction and Development (IBRD) lending volumes and International Finance Corporation (IFC) investments.

Building human capital: Pointing out severe flaws in Human Capital Index, Garg said it will not succeed in focusing the attention of the world on building the right kind of human capital, which new technologies will need. While welcoming the emphasis placed by the World Bank on building human capital, the Secretary pointed out that he is not so certain about the Human Capital Index in its current form.

The World Bank ranked India 115th among 157 countries in its first-ever Human Capital Index (HCI), drawing criticism from the Indian government. India’s neighbours Bangladesh, Nepal and Sri Lanka were better placed at 106th, 102nd and 74th position, respectively. The index took into account parameters like child mortality, health and education.

Highlighting that digital technologies are transforming the very system of production of goods and services and their distribution, he said these technologies are in the process of changing the nature of the work and nature of ‘jobs’ as one knows.

India has extensively used digital technologies to build fintech, most prominently in the payment space. Aadhaar system is global scale and is serving India very well in advancing the fintech agenda.

In the context of debt build-up in low income countries, harnessing fintech could also be one way to build fiscal efficiencies, better debt reporting and debt management.

13-Feb-2017: New IMF Training and Technical Assistance Center (SARTTAC) in Delhi.

IMF’s South Asia Training and Technical Assistance Center (SARTTAC) was inaugurated in Delhi. IMF’s SARTTAC is a pioneering initiative of the Government of India and the International Monetary Fund (IMF). This is the IMF’s First Fully Integrated Capacity Development Center, which brings together under one roof the two building blocks of capacity development —training and technical assistance.

SARTTAC’s six South Asian member countries include Bangladesh, Bhutan, India, Maldives, Nepal, and Sri Lanka. SARTTAC is a collaborative venture between the IMF, the member countries, and development partners. The center’s strategic goal is to help its member countries strengthen their institutional and human capacity to design and implement macroeconomic and financial policies that promote growth and reduce poverty.

South Asia is a rapidly growing region that is home to one fifth of the world’s population. SARTTAC will allow the IMF to meet more of the high demand for technical assistance and training from the region. Through its team of international resident experts, SARTTAC is expected to become the focal point for the delivery of IMF capacity development services to South Asia.

SARTTAC, the newest addition to the IMF’s global network of fourteen regional centers, is a new kind of capacity development institution, fully integrating customized hands-on training with targeted technical advice in a range of macroeconomic and financial areas, and generating synergies between the two. SARTTAC is located in world class facilities in New Delhi and is financed mainly by its six member countries — Bangladesh, Bhutan, India, Maldives, Nepal, and Sri Lanka — with additional support from Australia, the Republic of Korea, the European Union and the United Kingdom.

Background:

A global network of fourteen Regional Technical Assistance and Training Centers anchor IMF support for economic institution building and are complemented by global thematic funds for capacity development. They are financed jointly by the IMF, external development partners, and member countries.