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