NEW DELHI: Finance minister Nirmala Sitharaman has said there is a need for sovereign ratings to adequately account for emerging market and developing economies (EMDEs) economic fundamentals to ensure that the cost of capital for them and their ability to attract private capital is factored in.
Speaking in Washington at the IMFC’s plenary session, Sitharaman also underlined engagement with credit rating agencies and called for improvements in methodology to ensure they capture the fundamentals reflecting the ability and willingness to repay.
Policymakers have been calling on credit rating agencies to ensure their ratings accurately reflect the fundamentals of emerging economies and their default risk. India has in the past called for an upgrade in the country’s sovereign ratings given robust growth and solid fiscal consolidation measures.
Sitharaman also said the global economy had shown “remarkable resilience” and output was nearing its potential in some major economies while inflation has generally moderated and moved closer to the central banks’ targets.
The FM cautioned that there are several downside risks, including growing geopolitical tensions. She emphasised that the IMF’s surveillance and policy guidance remain vital for countries with debt vulnerabilities. However, IMF should remain even handed in its policy advice.
A finance ministry post on X quoted the FM as saying that the current global order warrants governance reforms in major global institutions including IMF.
Sitharaman lauded IMF for its readiness to build bridges in a fragmented world and sought that it remains future ready to serve by tailoring its surveillance, lending, and capacity development to the needs of members after taking due cognisance of IMF’s core competency as well as resource availability within the organisation.