RBI Governor Das calls for IMF, WB to play a bigger role in helping countries dealing with debt

economictimes.indiatimes.com:

Reserve Bank of India (RBI) Governor on Friday called for organisations like the International Monetary Fund (IMF) and the World Bank (WB) to play a bigger role in providing support programmes to countries with high levels of debt. Speaking at a seminar on the global economy organised by the Finance Ministry and the RBI, Das said recent experience suggests countries facing financial difficulties go to other bodies beyond the IMF because of 'perceived stigma' or lack of access. To this end, Das presented a few suggestions.

Calling for the IMF and WB to do more, Das said their crucial role in addressing global debt vulnerabilities cannot be overstated. “At present, the IMF’s precautionary programmes are available for countries with sound economic fundamentals. However, I see little reason these countries to seek precautionary lines.

Further, standby arrangements are offered to countries with a balance of payments (BoP) crisis. But standby arrangements come with performance benchmarks and are attached with stigma," Das said. «Recent events show how this can cause countries to seek support from other borrowers other than IMF.

It may be helpful if programmes are designed with less conditionality for countries with macro fundamentals are not sound, but reasonably resilient if they aren't marred by BoP stress.» He noted that since the IMF support to a country is linked to the quota size of countries, «the sixteenth general review of quotas and its attendant requirements, including governance reform needs to be completed expeditiously». Das said that it is essential that debt sustainability analysis for countries is realistic on growth and fiscal projections are fully founded on accurate and comprehensive debt data. «A global