Expressing concern over projected decline of World Bank lending, India has called for new solutions to bolster its financial capacity and that of International Monetary Fund (IMF).
“We are concerned that World Bank lending is projected to decline at this crucial juncture because of constrained financial capacity,” Finance Minister Pranab Mukherjee told reporters at the IMF headquarters here.
“We, therefore, call for new solutions to bolster the financial capacity of the Bank and IFC. We also urge the Bank to improve its responsiveness through more flexible and innovative policies and instruments,” he said at the joint press conference of G-24 finance ministers.
He asked the Bank to remain engaged with Middle Income Countries and to scale up resources and technical assistance for the developmental needs of MENA countries in transition.
Mr. Mukherjee said G-24 believes that a substantial increase in investment in infrastructure is required to realise their growth potential.
“We call on efforts to strengthen the existing architecture of global, regional and national institutions and to enhance PPPs and private sector involvement,” he said.
The meeting of G24 finance ministers, he said, discussed the global economy, reform of International Financial Institutions and Infrastructure Financing and Sustainable Development.
“We had frank and fruitful discussions amongst ourselves, including a brief interaction with the MD of the IMF and the World Bank President,” he said, adding that as part of the initiative to enhance the role and effectiveness of the Group, they also had a briefing on the G20 under the Mexican Presidency.
The G-24 communique, he said, shows that despite the diversity of the Group, they can find common ground.
“On the global economy, we remain concerned about the fragility of the recovery. Recent policy actions have reduced threats from the Euro area, but downside risks remain high, including from high and uncertain oil prices,” he said.
“The subdued global growth has adverse impact on growth in many emerging markets and developing countries. We believe that immediate and concerted actions are needed to restore confidence and boost growth,” Mr. Mukherjee said.
On the management of capital flows, Mr. Mukherjee said they have strong reservations on the integrated approach proposed by the IMF staff and insist that policy makers must have the flexibility to adopt policies that they consider appropriate to deal with capital flows.
“We also call for actions to mitigate excess volatility in commodity prices, both for food and energy, which is undermining growth,” he said.
“On the international financial institutions, we stress that the forward looking commitments on IMF quota and governance reform must be met on a full and timely basis,” Mr. Mukherjee said.
IMF has the necessary resources to play its role, but it should remain a quota based institution, he said.