Amid the growing global buzz around India, Finance Minister Arun Jaitley has urged the International Monetary Fund to speedily realign quota shares of dynamic economies like India to reflect the changed global economic realities.
Making a vigorous push on the quota issue at the International Monetary and Financial Committee’s annual meeting here on Saturday, Jaitley voiced India’s “extreme disappointment” with the delay in completion of the 15th General Review of Quota and demanded strict adherence to the new deadlines.
The committee approved the IMF Managing Director’s proposal to “reset the timetable to complete the 15th Review by the Spring Meetings of 2019 and no later than the Annual Meetings of 2019” in order to provide “adequate time to build the necessary broad consensus”.
India and other members of the committee called upon the Executive Board to establish a concrete work agenda to achieve this revised goal. Earlier, the annual meeting of 2017 had been set as the deadline to complete this exercise.
Reaffirming the commitment to a “strong, quota-based and adequately resourced IMF to preserve its role at the centre of the global financial safety net”, a communique issued at the end of the meeting said the realignment process will increase the quota shares for dynamic economies and the emerging market and developing countries as a whole, while protecting the voice and representation of the poorest member-nations.
Jaitley, who participated in both the plenary and restricted sessions of the IMFC, highlighted the need to focus on coordinated policy actions and growth strategies since the forces of globalization and multilateralism can go a long way in expanding global growth opportunities.
The panel’s closed door discussions centered on the policy responses to prolonged period of subdued global growth, low commodity prices and negative interest rates in some large economies.
Calling attention to the risks of low and negative interest rates and “significant loan impairments” in the banking system to the global financial stability, Jaitley called for “deleveraging” balance sheets to spur growth.
While global financial stability appears to have improved with the easing of external financing conditions and some recovery in commodity prices, he referred to persisting risks posed by low and negative interest rates, overhang of private debt and significant loan impairments in the banking system.
“Disorderly deleveraging of private debt could also impact growth. In order to guard against these risks, policy frameworks would have to be strengthened by accumulating buffers and deleveraging balance sheets,” he said.
The Finance Minister, speaking to Indian journalists after his meetings, said that although India with its strong growth trajectory is now more at the centre-stage of the global economy than ever before, the country has become more aspirational, thereby needing still higher growth rates.
“Compared to the rest of the world, we are doing much better,” he said when asked about the global buzz over India, commenting: “Compared to our own yardstick, we feel this is not enough. We can do still better…To be restless, to be impatient is a sign of wanting to do better.”
Asked about the IMF’s 7.6 per cent growth projection for 2016 and 2017, making it the fastest-growing economy, Jaitley expected the growth to remain robust with the kind of economic activities and investments planned for the next several years.
“I think with the kind of investments, both domestic and international, that we are getting, a reasonable amount of growth will always be there. If growth returns to the world, then you would probably move up. Structural reforms like GST can only add to that,” he said.
Jaitley also participated in the World Bank’s Development Committee meeting that focused on the ‘Forward look’ exercise carried out by the Bank and the Dynamic Formula of Shareholding of member-countries.
With the Bank facing resource constraints, he stressed the need to re-capitalise the Bank to enable it to meet the Sustainable Development Goals. At the same time, he expressed the hope that the Bank’s operations would become more agile and efficient and less expensive.