Mumbai: Finance Minister Nirmala Sitharaman said that after decades of integration, the global economy is witnessing unravelling multilateralism. She called for strengthening the capital base of multilateral development banks (MDBs) and providing debt relief to poor and developing countries.
Speaking at the G20 finance track national event in Mumbai over videoconference, the finance minister said India, during its presidency of G20, has ensured that geopolitical differences do not supersede the core G20 mandate of international cooperation. The event was hosted jointly by the department of economic affiars and the Reserve Bank of India.
“The international community must collaborate and find stronger ways to coordinate debt restructuring for low-income and vulnerable middle-income countries facing debt distress. We have made significant efforts this year in providing momentum for debt treatment for some countries,” said Sitharaman.
In the last eight months, G20 under the Indian presidency has stressed the criticality of addressing debt vulnerabilities in low-and middle-income countries in the wake of advanced economies raising interest rates and a sharp rise in commodity prices.
“By restructuring existing debts and enhancing access to affordable finance, the international community can contribute to releasing financial resources in debtor countries to shield vulnerable populations. In this era of technological transformation, unlocking the full potential of digital progress for all is essential for a fair and inclusive future,” said Sitharaman.
Sitharaman said that the team comprising NK Singh and Larry Summers looking into MDB reform had proposed a triple agenda of tackling the global challenge of poverty reduction, tripling the sustainable lending level by 2030, and enhancing the capital of the MDBs.
Speaking at the same event V Anantha Nageswaran, chief economic advisor, said that the geo-economic fragmentation will most harm emerging and developing economies that rely more on an integrated global economy and have benefited from globalization.
Nageswaran said the debt burden has worsened because of the central bank’s rate tightening to combat inflation. “It is essential for major central banks to communicate their policy actions so as not to trigger a market panic which can have deleterious effects not just at home, but also abroad, especially on highly leveraged, emerging and developing economies,” said Nageswaran.
