INTERNATIONAL ECONOMIC INSTITUTIONS- IMF &WB WTO REC

IMF

16.	Global Financial Stability Report	IMF (International Monetary Fund)
17.	World Economic Outlook	IMF (International Monetary Fund)

https://en.wikipedia.org/wiki/International_Monetary_Fund


SDR- https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/14/51/Special-Drawing-Right-SDR

US Senate ratifies IMF reforms as part of a Budget Bill

December 21, 2015

The United States (US) Senate has ratified reforms in the International Monetary Fund (IMF) to boost the representation of emerging economies as part of a budget bill.

The reforms ratified in the legislation are in line with the proposed 2010 Quota Reforms and now it will go to President Barack Obama for assent.

These proposed reforms are the biggest change in the governance of the Fund since it was established after World War Two in 1945 after the Bretton Woods Conference.

Proposed reforms in the Bill

• Put four emerging markets Brazil, China, India and Russia among the IMF’s top 10 shareholders and give emerging markets more influence at the global lender.
• Gives emerging markets more voting power and double the Fund’s resources.
• China’s vote at the IMF would increase to 6 per cent from 3.8 per cent. It would make it the third-largest shareholder from its previous sixth position.
• The voting power and quota shares of the IMF’s poorest member countries will be protected.
• IMF’s Board will entirely consist of elected Executive Directors. It will end the current category of appointment of Executive Directors by five largest quotas holders.
• Quotas of all 189 (LATEST country NAURU) members will increase as the Fund’s quota resources rise to about 477 billion special drawing rights (SDR) from 238.5 billion.
• India’s voting rights will also rise to 2.6 per cent from the current 2.3 per cent. US’s quota share drop from 16.7 per cent to 16.5 per cent but it will retain its veto power.
• The biggest losers in these proposed reforms are European economies which will see their voting rights diminished.

IMF opens technical assistance and training centre SARTTAC in New Delhi  

February 15, 2017

The International Monetary Fund (IMF) has opened a first-of-its-kind South Asia Training and Technical Assistance Centre (SARTTAC) in New Delhi for economic capacity building in South Asia.

It will work to support local member countries of South Asia viz. India, Bangladesh, Bhutan, Maldives, Nepal and Sri Lanka to build human and institutional capacity and implement policies for growth and poverty reduction.

About SARTTAC

• SARTTAC is financed mainly by its six member South Asia countries (mentioned above) with additional support from Australia, South Korea, European Union and United Kingdom.
• It 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.
• It will allow the IMF to meet more of the high demand for technical assistance and training from the region. It is expected to become the focal point for the delivery of IMF capacity development services to South Asia.

Background

In 2016, IMF Managing Director Christine Lagarde and Union Finance Minister Arun Jaitley had signed a Memorandum of Understanding (MOU) to establish a capacity development centre for South Asia. The opening of SARTTAC is part of the MoU and marks a major milestone in the partnership between the IMF and its member countries in the region.

IMF and WB jointly release Financial System Stability Assessment report

December 21, 2017

The International Monetary Fund (IMF) and World Bank (WB) has released the Financial System Stability Assessment (FSSA) and Financial Sector Assessment (FSA) respectively.

It was second comprehensive Financial Sector Assessment Program (FSAP) of Indian financial system undertaken by the joint IMF-World Bank team conforming to the highest international standards.

Financial System Stability Assessment (FSSA)

‎FSAP is joint program of IMF and WB involved in developing countries and region only. It undertakes a comprehensive and in-depth analysis of a country’s financial sector. ‎It is conducted every five years. Last FSAP for India was conducted in 2011-12 and the report was published by IMF in January 2013.

Highlights of 2017 FSAP

The FSAP assessment acknowledges India’s strong growth in recent years in both economic activity and financial assets. It also acknowledges many efforts undertaken by India like tackling Non-Performing Assets (NPAs), recent recapitalization measures for banks and introduction of special resolution regime, formalization of National Pension System (NPS) and making the pension sector regulator statutory.

It also acknowledged India’s efforts towards passing of Insolvency and Bankruptcy Code and setting up of Insolvency and Bankruptcy Board of India (IBBI) and initiatives such as ‘no frills’ account (under Jan DhanYojana) and introduction of unique biometric identification number (AADHAR).

It also acknowledged RBI’s substantial progress made in strengthening banking supervision by introducing of risk-based supervision in 2013 through comprehensive and forward-looking Supervisory Program for Assessment of Risk and Capital (SPARC) and Asset Quality Review (AQR) and strengthening of regulations in 2015 leading to improved distressed asset recognition.

It also acknowledged RBI’s Basel III framework and other international norms have been implemented or are being phased in. It acknowledges RBI’s move of establishing new Enforcement Department and revising Prompt Corrective Action (PCA) framework that incorporates more prudent risk-tolerance thresholds. ‎It has recommended that governance and financial operations of Public Sector Banks (PSBs) can be improved by developing strategic plan for their consolidation, divestment, and privatization.

Tags: Banking • Business • Economy • Financial Sector • Financial System Stability Assessment • IMF • World Bank

Steering Committee of SARTTAC held in New Delhi

November 18, 2017

Interim Meeting of Steering Committee of International Monetary Fund (IMF)’s South Asia Regional Training and Technical Assistance Centre (SARTTAC) was held in New Delhi.

Officials from all Six SARTTAC Member countries attended the meeting together with Development Partner representatives European Union, United Kingdom, Australia, and USAID  along with IMF staff.

Steering Committee SARTTAC

It endorsed FY 2018 work plan and also approved new work area in Government Finance and Public Debt Statistics. It welcomed progress in securing over 90 percent of the financing for SARTTAC’s first five-year (2017-2022) Phase. It also approved new work area in Government Finance and Public Debt Statistics, where members have expressed strong demand and work is underway to plan future technical assistance and training. The next Steering Committee meeting will take place in Sri Lanka in May, 2018.

South Asia Regional Training and Technical Assistance Centre (SARTTAC)

SARTTAC was inaugurated in February 2017. It is first IMF Regional Capacity Development Centre to fully integrate training and technical assistance activities. It is located in New Delhi, India. It works with Bangladesh, Bhutan, India, Maldives, Nepal, and Sri Lanka. Member countries finance two-thirds of SARTTAC’s Budget, with additional funding from European Union, Korea, United Kingdom, and Australia.

Its goal is to help member countries to strengthen their institutional and human capacity for designing and implementing macroeconomic and financial policies that promote growth and reduce poverty. It will help Governments modernize their economic policies and institutions

India to grow 7.4% in 2018: IMF’s Asia & Pacific Regional Economic Outlook report

May 10, 2018

The International Monetary Fund (IMF) in its Asia and Pacific Regional Economic Outlook report has reaffirmed that India will be the fastest growing major economy in 2018, with growth rate of 7.4% and 7.8% in 2019.

Key Facts

India’s medium-term growth prospects remain positive. India is recovering from effects of demonetisation and introduction of Goods and Services Tax (GST). The recovery is expected to be underpinned by rebound from transitory shocks as well as robust private consumption.

Medium-term consumer price index inflation is forecasted to remain within but closer to upper bound of Reserve Bank of India’s (RBI) inflation-targeting band of 4% with a plus or minus 2% change. Given increased inflation pressure, monetary policy should maintain a tightening bias.  India’s current account deficit in fiscal year 2017-18 is expected to widen somewhat but will remain modest, financed by robust foreign direct investment inflows

South Asian Region: After India, Bangladesh is projected to be fastest-growing economy in South Asia followed by Sri Lanka and Nepal. (Pakistan, which is grouped with Middle East, was not covered in this report). Overall, South Asia continues will be both fastest-growing region in the world and main engine of world’s economy.

The region contributes more than 60% of global growth and three-quarters of this comes from India and China, which is expected to grow 6.6 % in 2018 and 6.4% in 2019. US Government’s fiscal stimulus is expected to support Asia’s exports and investment.

However, in the medium term downside risks dominate for region and these include tightening of global financial conditions, shift toward protectionist policies, and increase in geopolitical tensions. Because of these uncertainties countries in the region need to follow conservative policies aimed at building buffers and increasing resilience and push ahead with structural reforms.

India is now world’s sixth largest economy: IMF

IMF’s April 2018 WEOAccording to International Monetary Fund’s (IMF) World Economic Outlook (WEO) for April 2018, India is now the world’s sixth largest economy at $2.6 trillion (interms of GDP), displacing France. The five economies ahead are United States, China, Japan, Germany and United Kingdom.

India is expected to grow at 7.4% in 2018 and 7.8% in 2019, making it fastest growing economy in the world. India has made progress on structural reforms in recent past, including through implementation of Goods and Services Tax (GST), which will help reduce internal barriers to trade, increase efficiency and improve tax compliance.

The medium-term growth outlook for India is strong but important challenge is to enhance inclusiveness. Moreover, India’s high public debt and recent failure to achieve budget’s deficit target needs fiscal consolidation into e medium term to further strengthen fiscal policy credibility.

The main priorities for India are lifting constraints on job creation and ensuring that demographic dividend is not wasted. For this India needs to ease labour market rigidities, reduce infrastructure bottlenecks, and improve educational outcomes.

EXPORT IMPORT POLICY

EXIM Bank Current Affairs

EXIM Bank extends $4.5 billion loan to Bangladesh for social, infrastructure projects

The Export-Import Bank of India (Exim Bank) will provide loans worth about US $4.5 billion (Rs 29,200 crore) to Bangladesh for financing of various social and infrastructure projects. In this regard, Exim Bank has entered into agreement with Bangladesh Government in October 2017 to extend this line of credit (LoC) facility on behalf of Government of India (GoI).

Key Facts

Bangladesh will also use this financing facility to import consultancy services from India. Under the arrangement, financing export of eligible goods and services from India will be allowed which are eligible for export under Foreign Trade Policy of GoI and whose purchase may be agreed to be financed by Exim Bank under this agreement. The goods include plant, services (including consultancy services) and machinery and equipment.

Export-Import Bank of India (Exim Bank)

Exim Bank is wholly owned GoI entity for financing, facilitating and promoting foreign trade of India. It was setup in 1982 and is headquartered in New Delhi. It extends LoC to overseas financial institutions, regional development banks, sovereign governments and other entities abroad. It enables buyers in those countries to import developmental and infrastructure, equipment’s, goods and services from India on deferred credit terms. It also facilitates investment by Indian companies abroad for setting up subsidiaries, joint ventures or overseas acquisitions.

Exim Bank extends $500 million loan facility to 15-nation ECOWAS

March 28, 2018

The Export-Import Bank of India (Exim Bank) has inked line of credit (LoC) agreement with Bank for Investment and Development (EBID) to provide US $500 million credit facility to fund various development projects in 15-member countries of Economic Community of West African States (ECOWAS) region in western-south Africa.

Key Facts

The LoC of US $500 million to EBID is umbrella limit for financing developmental projects in 15-member countries of EBID in ECOWAS region. These projects entitled to get funding may belong any sector which is of priority of governments of any of member states of EBID. With signing of LoC agreement, Exim Bank till date has extended four LoCs to EBID, with support of government, taking total value of LOCs to US $1,000 million.

Economic Community of West African States (ECOWAS)

The ECOWAS is regional group of 15 West African countries. It was founded in May 1975, with the signing of the Treaty of Lagos. Its mandate is to promote economic integration in all fields of activity of the constituting countries. Its 15 member countries are Benin, Cape Verde, Burkina Faso, Gambia, Cote d’Ivoire, Ghana, Guinea Bissau, Guinea, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.

key features of the new Foreign Trade Policy:

> India to be made a significant participant in world trade by 2020

> Merchandize exports from India (MEIS) to promote specific services for specific Markets Foreign Trade Policy

> FTP would reduce export obligations by 25% and give boost to domestic manufacturing

> FTP benefits from both MEIS & SEIS will be extended to units located in SEZs

> FTP 2015-20 introduces two new schemes, namely "Merchandise Exports from India Scheme (MEIS)" and "Services Exports from India Scheme (SEIS)". The 'Services Exports from India Scheme' (SEIS) is for increasing exports of notified services. These schemes (MEIS and SEIS) replace multiple schemes earlier in place, each with different conditions for eligibility and usage. Incentives (MEIS & SEIS) to be available for SEZs also. e-Commerce of handicrafts, handlooms, books etc., eligible for benefits of MEIS.

> Agricultural and village industry products to be supported across the globe at rates of 3% and 5% under MEIS. Higher level of support to be provided to processed and packaged agricultural and food items under MEIS.

> Industrial products to be supported in major markets at rates ranging from 2% to 3%.

> Served From India Scheme (SFIS) will be replaced with Service Export from India Scheme (SEIS).

> Branding campaigns planned to promote exports in sectors where India has traditional Strength.

> SEIS shall apply to 'Service Providers located in India' instead of 'Indian Service Providers'.

> Business services, hotel and restaurants to get rewards scrips under SEIS at 3% and other specified services at 5%.

> Duty credit scrips to be freely transferable and usable for payment of customs duty, excise duty and service tax.

> Debits against scrips would be eligible for CENVAT credit or drawback also.

> Nomenclature of Export House, Star Export House, Trading House, Premier Trading House certificate changed to 1,2,3,4,5 Star Export House.

> The criteria for export performance for recognition of status holder have been changed from Rupees to US dollar earnings.

> Manufacturers who are also status holders will be enabled to self-certify their manufactured goods as originating from India.

> Reduced Export Obligation (EO) (75%) for domestic procurement under EPCG scheme.

> Online procedure to upload digitally signed document by Chartered Accountant/Company Secretary/Cost Accountant to be developed.

> Inter-ministerial consultations to be held online for issue of various licences.

> No need to repeatedly submit physical copies of documents available on Exporter Importer Profile.

> Validity period of SCOMET export authorisation extended from present 12 months to 24 months.

> Export obligation period for export items related to defence, military store, aerospace and nuclear energy to be 24 months instead of 18 months

> Calicut Airport, Kerala and Arakonam ICDS, Tamil Nadu notified as registered ports for import and export.

> Vishakhapatnam and Bhimavarm added as Towns of Export Excellence.

> Certificate from independent chartered engineer for redemption of EPCG authorisation no longer required.

External Sector

• India’s external sector has a bright future as global trade is expected to grow at 4 per cent in 2018 from 2.4 per cent in 2016.
• Bilateral trade between India and Ghana is rising exponentially and is expected to grow from US$ 3 billion to US$ 5 billion over the coming three years, stated Mr Aaron Mike Oquaye Junior, Ghana's Ambassador to India.

• India has revised its proposal on trade facilitation for services (TFS) at the World Trade Organisation (WTO) and has issued a new draft, with the contents being more meaningful and acceptable to other member countries.
• Indian exports of merchandise shipments is expected to reach US$ 325 billion in 2017-18, compared to US$ 275 billion in 2016-17, as per Mr Ganesh Kumar Gupta, President, Federation of Indian Export Organisations (FIEO).
• The Union Cabinet, Government of India, has approved the proposed Memorandum of Understanding (MoU) between Export-Import Bank of India (EXIM Bank) and Export-Import Bank of Korea (KEXIM).
• The Goods and Services Network (GSTN) has signed a memorandum of understanding (MoU) with Mr Ajay K Bhalla, Director General of Foreign Trade (DGFT), to share realised foreign exchange and import-export code data, process export transactions of taxpayers under goods and services tax (GST) more efficiently, increase transparency and reduce human interface.
• In March 2017, the Union Cabinet approved the signing of the customs convention on the international transport of goods, Transports Internationaux Routiers (TIR) making India the 71st signatory to the treaty, which will enable the movement of goods throughout these countries in Asia and Europe and will allow the country to take full benefit of the International North South Transportation Corridor (INSTC).
• Mr Richard Verma, the United States Ambassador to India, has verified that India-US relations across trade, defence and social ties will be among the top priorities of the newly elected US President Mr Donald Trump's administration.

Foreign Trade Policy

• In the Mid-Term Review of the Foreign Trade Policy (FTP) 2015-20 the Ministry of Commerce and Industry has enhanced the scope of Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS), increased MEIS incentive raised for ready-made garments and made- ups by 2 per cent, raised SEIS incentive by 2 per cent and increased the validity of Duty Credit Scrips from 18 months to 24 months.
• All export and import-related activities are governed by the Foreign Trade Policy (FTP), which is aimed at enhancing the country's exports and use trade expansion as an effective instrument of economic growth and employment generation.
• The Department of Commerce has announced increased support for export of various products and included some additional items under the Merchandise Exports from India Scheme (MEIS) in order to help exporters to overcome the challenges faced by them.
• The Central Board of Excise and Customs (CBEC) has developed an 'integrated declaration' process leading to the creation of a single window which will provide the importers and exporters a single point interface for customs clearance of import and export goods.
• As part of the FTP strategy of market expansion, India has signed a Comprehensive Economic Partnership Agreement with South Korea which will provide enhanced market access to Indian exports. These trade agreements are in line with India’s Look East Policy. To upgrade export sector infrastructure, ‘Towns of Export Excellence’ and units located therein will be granted additional focused support and incentives.
• RBI has simplified the rules for credit to exporters, through which they can now get long-term advance from banks for up to 10 years to service their contracts. This measure will help exporters get into long-term contracts while aiding the overall export performance.
• The Government of India is expected to announce an interest subsidy scheme for exporters in order to boost exports and explore new markets.

Highlights from the review released by Alok Chaturvedi, Director General of Foreign Trade

• The value of new incentives is Rs. 8,000 crore
• The FTP would focus on micro, small and medium enterprises, labour-intensive segments and agriculture sector.
• Incentives for goods exports is Rs. 4,567 crore, and for services exports is Rs. 1,140 crore.
• This is in addition to the recently announced incentives to ready-made garments.
• Self-certification scheme for duty-free imports
• FTP is a dynamic document and regular changes are made to increase value addition in the country, generate more employment and boost exports
• Today's announcement includes a 2% increase each in incentive rates of the Merchandise Exports from India Scheme and Services Export from India Scheme.
• Trade accounts for 45% of the country's GDP. FTP incentives now cover 8,000 of the total 12,000 lines of items.
• Of these incentives, Rs 749 crore for leather and footwear, Rs 1354 crore for agriculture and related items, Rs 759 crore for marine exports, Rs 369 crore for telecom and electronic items, Rs 921 crore for handmade carpets, Rs 193 crore for medial and surgical equipments, Rs 1140 crore for textiles and ready made garments.
• A new trade data analytics division under the Directorate General of Foreign Trade will analyse real time data to help fine tune policy.

highlights of the Mid-Term Review of the Foreign Trade Policy (FTP) 2015-20 released by Commerce and Industry Minister Suresh Prabhu here today: 

*Scope of Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS) enhanced. 

*MEIS incentive raised for ready-made garments and made- ups by 2% (additional annual outgo Rs 2,743 crore). 

*Across-the-board increase of 2 per cent in existing MEIS for exports by MSMEs/labour incentive industries (Rs 4,567 crore). 

*Annual incentive increased by 34 per cent to Rs 8,450 crore. 

*SEIS incentives raised by 2 per cent with a view to boosting services sector exports (Rs 1,140 crore). 

*Validity of Duty Credit Scrips increased from 18 months to 24 months to enhance their utility in GST framework. 

*To focus on improving ease of trading across borders for exporters and importers. 

*Professional team to handhold, assist and support exporters in accessing markets, meeting regulatory norms. 

*New Logistics Division to promote integrated development of the logistics sector. 

*State-of-the-art trade analytics division in DGFT for data-based policy actions. 

*New agricultural exports policy to focus on increasing exports of value-added agri products. 

*New Services Division in DGFT to examine Exim policies and procedures to push services exports. 

*Supplies of goods and services to SEZs to be treated as zero rated under GST. 

*Import of second hand goods for repair/refurbishing/re- conditioning/re-engineering made free. 

*Increase focus on exploring new markets and products, raising share in traditional markets and products. 

*Promotion of exports by MSMEs and labour intensive sectors to increase employment opportunities for youth. 

*To enhance participation of Indian industry in global value chains.

Economic Survey Notes Important Developments on Trade Policy Front 

Posted On: 29 JAN 2018 12:33PM by PIB Delhi

 Two important developments on the trade policy  front during the year relate to the mid-term review of Foreign Trade Policy (FTP) and the recent multilateral negotiations of WTO in December 2017.  Besides these, there were some developments on the trade logistics front and anti dumping measures.  This was stated in the Economic Survey in 2017-18 tabled in Parliament today by the Union Finance & Corporate Affairs, Shri Arun Jaitley

FTP-Mid Term Review and subsequent trade related policies.

In the mid-term review of FTP released on 5th December 2017, some additional measures have been taken to help India’s trade sector.  Besides, on 15th December, 2017, a special package for employment generation in the leather and footwear sector was approved by the Government. This is also likely to help exports from this sector.

Multilateral Negotiations

The Eleventh Ministerial Conference (MCII) of the World Trade Organization (WTO) ended without  aMinisterial Declaration or any substantive outcome.

During MCII India stood firm on its stand on the fundamental principles of the WTO, including multilateralism, rule-based consensual decision making, an independent and credible dispute resolution and appellate process, the centrality of development which underlies  the Doha Development Agenda (DDAQ) and special and differential treatment for all developing countries.

Foreign Exchange Reserves

India’s foreign exchange reserves reached US$ 409.4 billion on end-December 2017.  Foreign exchange reserves grew by 14.1 percent on a y-o-y basis from end December 2016  (US$ 358.9 billion) to end December 2017 (US$ 409.4 billion) and it grew by 10.7 percent from end- March, 2017 (US$370.0 billion) to end December 2017.  Foreign exchange reserves increased further  to US$ 413.8 billion on January 12, 2018.

The import cover of India’s foreign exchange reserves was 11.1 months at end-September 2017 as compared with 11.3 months at end -March 2017.  Within the major economies running current account deficit, India is among the largest foreign exchange reserve holders and sixth largest among all countries of the world.