Work to enhance public debt transparency, sustainability: IMF to world bodies

23/04/2018

Washington: An IMF advisory committee has called on global financial institutions, including the World Bank, to work on a multi-pronged programme to enhance debt transparency and sustainability, as India sought mitigation of the rising debt vulnerabilities of low income countries. The International Monetary and Finance Committee (IMFC) also noted that global growth prospects are threatened by increasing trade disputes, geopolitical tensions and low income countries' heavy debt burden.
Economic Affairs Secretary Subhash Garg Garg, in his address to the G-20 yesterday, stressed that increasing debt burden among low-income developing countries (LIDCs) is "clearly, a massive hindrance" in addressing the Sustainable Development Goals. LIDCs face challenges centered on equitable growth, resilience, finance and partnerships, and leveraging external public and private finance, he said.
To mitigate the growing debt concerns of LIDCs, he said the IMF, the World Bank and other international organisations must "develop and articulate a clear strategy for enhancing public debt transparency on both the debtor and creditor side".
In a statement at the end of three days of meetings yesterday, the IMFC heeding to the voice of countries like India, the US, Britain and France, called on the IMF and the World Bank to work on a multi-pronged programme to enhance debt transparency and sustainability.
"Debt vulnerabilities are rising in many countries, particularly in LIDCs. We call on the IMF and the World Bank Group to work together on a multi-pronged work programme to enhance debt transparency and sustainability and address LIDCs debt vulnerabilities," it said.
On the conclusion of the annual spring meeting of the IMF and the World Bank, the IMFC meeting chaired by South African Governor of Reserve Bank Lesetja Kganyago in a communique urged the IMF to work closely with members to strengthen fiscal frameworks and improve debt management capacity, and to work with debtors and creditors on promoting sustainable lending practices and tackling data gaps.
Welcoming efforts to conduct a rigorous, evenhanded, candid and transparent assessment of excessive global imbalances and exchange rates in the 2018 External Sector Report, the IMFC said it look forward to the stock-take on capital flow management measures based on the Institutional View.
Supporting the IMF's collaboration with stakeholders on financial technology, crypto assets and cyber security, the communique called on the IMF to set out a clear process for supporting country authorities in developing their medium-term revenue strategies.
"We support further efforts to address the withdrawal of correspondent banking relationships and its adverse consequences, including on remittances, trade flows, and financial inclusion. We reaffirm our support for the IMF's work to help countries achieve the 2030 SDGs. "We support the IMF's continued efforts to assist countries in dealing with the macroeconomic consequences of large refugee inflows," it said.
Seeking to enhance resilience and raising medium-term prospects, the communique welcomed the IMF's enhanced engagement on governance issues, including corruption, as well as efforts to establish a framework to guide its involvement in social protection issues.
"We agree that the IMF will need to consider the effects of technology and digitalisation in its macroeconomic analysis, including on inequality, productivity, labor and financial markets, fiscal policy, monetary policy, and measurement of the digital economy," it said.
Observing that global growth has further strengthened and is increasingly broad-based, driven by a strong rebound in investment and trade, the IMFC said risks are broadly balanced in the near term, but remain skewed to the downside beyond the next several quarters. Rising financial vulnerabilities, increasing trade and geopolitical tensions, and historically high global debt threaten global growth prospects, according to the communique. It also warned that demographic headwinds and subdued productivity growth may reduce the potential for higher and more inclusive growth going forward.
"The window of opportunity remains open and should be used expeditiously to advance policies and reforms that sustain the current upswing, enhance resilience, and raise medium-term growth for the benefit of all, it said.
The IMFC said it will continue to use all policy tools to achieve strong, sustainable, balanced, inclusive, and job-rich growth.
"In line with central bank mandates and mindful of financial stability risks, monetary accommodation should continue where inflation remains weak and be gradually withdrawn where inflation looks set to return to central bank targets," the communique said. Fiscal policy should be flexible and growth-friendly, rebuild buffers where needed, avoid procyclicality, create space to invest in infrastructure and workforce skills, and ensure that public debt as a share of GDP is on a sustainable path, it said.

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