NEW DELHI: Union Finance Minister Arun Jaitley has cautioned the International Monetary Fund to watch out for three risks posed to emerging markets and developing economies — the US Federal Reserve’s step towards restoring normal monetary conditions, the global slowdown in investments, and the lack of employment.
According to Jaitley, India is one of the few large economies in the world and the most important priority of the government is to find ways to provide employment to the 12 million young people entering the workforce annually.
He made these comments while speaking at the International Monetary and Financial Committee (IMFC) restricted breakfast session in Washington DC, which was focussed on the ‘Dialogue on Policy Challenges.’
Jaitley acknowledged that the World Economic Outlook for this year and the next was reassuring. However, he urged the international community to make a fair and unbiased assessment of the macro-prudential and capital flow management measures available to and used by countries to manage short-term capital volatility.
The finance minister also highlighted the efforts taken by countries in finding ways to revive investments, which is critical to sustain global growth. He also urged the global community to explore collective and co-ordinated action in this regard.
Jaitley also appreciated the focus on cyber security in the early warning exercise and emphasised that the entire global financial system is vulnerable to this threat, more so because it is so interconnected.
Later, speaking at the plenary session of IMFC, the finance minister pointed out the lack of progress in reaching a consensus on the review of quotas. He urged the IMF – the board, the management and the staff – to diligently explore the space offered by the three objectives laid out in the IMFC Communiqué in October 2016: reduce misalignments, shift quota shares in favour of dynamic emerging economies and protect the shares of low-income countries and small states.
Jaitley also attended the 96th Meeting of the Development Committee Plenary of the World Bank.
The Union finance minister pointed out the downward trend in lending to middle income countries and urged the shareholders of the World Bank Group not to forget the pockets of poverty in lower middle income countries where concessional finance continues to be indispensable.