SPEECH OF MINISER FOR FINANCE
AND COMPANY AFFAIRS AT THE INTERNATIONAL MONETARY AND FINANCIAL
COMMITTEE MEETING
The Union Minister
for Finance and Company Affairs, Mr. Jaswant Singh urged the International
Monetary Fund to explore adopting further measures to contain
recessionary forces. He said that while timely response by the
IMF had contributed to restoring market confidence in certain
emerging economies, such initiatives needed to be strengthened
to supplement and reinforce national policies in dealing with
business cycle fluctuations and financial crises. The Minister
was making a statement at the Sixth Meeting of the International
Monetary and Financial Committee in Washington yesterday.
Referring to the
impact of high and volatile oil crisis in the process of global
recovery, the Minister underlined the need to find an enduring
and long-term solution to the problem. He suggested the need to
expand the Compensatory Financing Facility by including an oil
element.
The Minister
welcomed the fact that the Fund had recognized the strength
and resilience of the exchanged rate managed by India and had
included India under the Financial Transactions Plan. He said
that India’s GDP continued to grow at an impressive rate and its
recent growth performance is one of the strongest in the world.
He said that despite the prevailing drought conditions in some
parts of the country, the economic environment is congenial for
growth with modest inflation, ample liquidity and soft interest
rates, a strong external sector, record level of forex reserves
and a realistic exchange rate policy.
The Minister
cautioned that the international community must avoid any possible
shift in the burden of private sector’s repayment obligations
to the public sector. He said that there is little clarity about
the dispute resolution mechanism and the Fund’s experience with
a variety of methods to involve the private sector for lengthening
credit lines and restructuring debt contracts would be useful
to members in designing constructive country specific arrangements
with the private sector. He felt that there is need to ensure
a more equitable sharing of the burden of adjustment between creditors
and debtors in market oriented economies. In particular, measures
to bail in the private sector and progress on Sovereign Debt Restructuring
would be important.
The Minister
stated that it is also necessary for developing countries to put
in place suitable policies to keep external debt and external
debt servicing within manageable limits, keeping in view the "liquidity
at risk" associated with various kinds of external flows.
The Minister said that India’s external debt management policy
had been highly prudent despite substantial capital account liberalization.
The Minister
welcomed the Fund’s recent initiatives on a rigorous assessment
of the financial sector emphasizing on greater transparency and
to encourage greater compliance with international standards in
developing countries. He also welcomed the additional commitments
by the EU and the US to increase bilateral assistance. He said
that India fully supported the global efforts to prevent the abuse
of the international financial system for money laundering and
financing of terrorism. He said that the banking system in India
had also been sensitized and adequate measures had been put in
place to avoid the misuse of the banking system for financial
crimes.
