RBI Governor Shaktikanta Das Urges IMF To Swifty Complete The Quota Review

Das pointed out the IMF needs to work on it’s funding conditions as distressed countries are forced to look for other options due to stigmas related to the assistance seeking process.

Das suggested designing programs involving reduced conditions for countries that display “reasonably resilient”, if not sound macro-fundamentals.

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Reserve Bank of India (RBI) Governor Shaktikanta Das called for a swift completion of the 16th general review of the quotas at the International Monetary Fund (IMF) on Friday. Explaining that a quick review can help the organisation in assisting distressed countries in an efficient manner, the Indian banking authority head recommended the review be completed swiftly. 

Das was speaking at a G20 seminar on the global economy, organised by the RBI and Finance Ministry, reported PTI. The governor pointed out that the IMF needs to work on it’s funding conditions as the countries in need of assistance are forced to look for other options due to the conditions and stigmas associated with the assistance seeking process. 

He elaborated and said, “My point is that corrective measures, including financing, should be put in place in a timely, non-stigmatised and more open access basis. For this, a bigger and stronger IMF that is capable of managing the levels of country-risk assumes crucial importance. This is more so since the IMF's support is linked to the quota size of the member-countries, the 16th general review of the quotas and its attendant requirements, including governance reforms, need to be completed expeditiously.”

Further stressing the need for a bigger and stronger IMF, he pointed out that recent experiences indicate that poor countries facing financial crisis and difficulties are forced to approach other bodies for assistance due to the stigma and lack of access attached to the IMF. 

He pointed out that the IMF and World Bank play an important role in addressing debt vulnerabilities at a global level as they are placed at the centre of the international monetary and financial system. He, therefore, urged the institutions to consider the plights of countries facing debt crisis more prominently. 

Talking about the limitations in the methods of funding of these institutions, Das said, “The IMF's precautionary programs such as the precautionary lending line are available for countries with sound macro-fundamentals but there is little reason for countries with strong macro-fundamentals to seek precautionary lines. Further, the stand-by arrangements are offered for countries with a balance of payments crisis but such arrangements come with performance benchmarks and the attendant stigma.”

To combat the issue, Das suggested designing programs involving reduced conditions for countries that display “reasonably resilient”, if not sound macro-fundamentals, if they are not plagued by a balance of payments stress, as cited in the report.

Das further argued that these reforms will not only increase the IMF’s oversight of the global monetary system but also increase “traction for it’s policy advice”. He urged that debt should not hinder the potential of growth worldwide, the report added.